Asset theft refers to the loss of physical or nonphysical items of value owned by a company. Assets might be stolen by employees or by third parties. The definition of asset theft is sometimes extended to include misappropriation of assets, since this results in stolen time or resources.
In order to thrive, your business must be proactive in preventing asset theft, which can cost millions and derail your planned budget, putting your operation in the red.
Luckily, a few simple steps can go a long way toward preventing resources lost to asset theft: Any practices that highlight the location and condition of your assets will deter theft, and extra security measures can make potential thieves think twice.
In this guide, we’ll discuss the best ways to keep an eye on your assets, from asset monitoring strategies and systems to CCTV cameras, as well as showing you how to prevent asset theft.
In this Guide:
- Types of Asset Theft
- Causes of Asset Theft
- Consequences of Asset Theft
- How to Prevent Asset Theft at Your Business
- Asset Theft: Key Takeaways and Next Steps
Types of Asset Theft
Most often, asset theft refers to employee asset theft, the act of an employee stealing the assets of a company they work for. These assets might be physical hardware such as printers and generators, or it might be the asset fuel itself.
However, another major type of asset theft is third-party asset theft. This includes robbery, when a third party breaks into a business location such as a storefront or warehouse. However, a third-party asset theft may also happen while assets are being shipped as cargo, either due to deception, when the thieves poses as legitimate carriers, or, less commonly, due to a hijacking.
Asset theft isn’t always physical. If an employee uses a software license for personal use or steals a database of private information, they might be a software asset thief. In addition, there’s asset misappropriation, which isn’t a physical theft, but which some consider a theft of time and resources through fraud. We’ll explain this more in our next section.
Asset Theft vs Asset Misappropriation
Asset misappropriation goes beyond physical theft. As a term, asset misappropriation might cover:
- Asset misplacement: An employee accidentally or knowingly leaving an asset in the incorrect location. This can increase busywork, which reduces time on-task. It might even lead to an asset being fully lost.
- Asset misuse: An employee accidentally or knowingly operating an asset during an unauthorized time or at an unauthorized location. This adds wear and tear to the asset, reducing its lifespan. Depending on the asset, it might reduce fuel, pose a safety concern, or even cause the asset to breakdown beyond repair.
- Asset theft: Stealing an asset entirely and not returning it is a clear misappropriation of the asset.
On the whole, misplacement or misuse are typically not as bad as outright theft, since the asset can usually be recovered, and the culprit may have been acting in good faith. However, each business should determine for itself how to act in order to avoid any type of misappropriation or theft.
Causes of Asset Theft
How do assets get stolen? Often, the reason boils down to a lack of visibility over the assets, as well as a lack of any barriers to hauling the assets away.
Unmonitored assets are in danger of theft. This might be dependant on the physical location of the assets. Many warehouses have just one camera on the major entrance, or no cameras at all. Staffing reductions might leave just one worker on the job with no oversight.
Unsecured assets are also at risk of being stolen. The absence of security guards or deterrance equipment, from wheel locks to padlocked chains, may make a quick robbery more appealing.
Finally, a lack of cybersecurity can be another avenue that leads to asset theft. If an operation’s computer systems require every user log into their own role-based account, they will always be able to track whose account has accessed any valuable data or software.
Consequences of Asset Theft
Together with fraud and other types of employee theft, the ACFE (Association of Certified Fraud Examiners) found asset theft contributed to $3.6 billion in losses between January 2020 and September 2021, in a report covering 133 countries and 2,110 instances of fraud.
The most obvious downside to asset theft? Your business no longer owns that asset, so you have fewer resources. Your operating costs will need to go up in order to replace that missing asset. There are more downsides to consider.
Increased downtime
Asset theft doesn’t just result in the financial loss of the asset itself: You’ll also lose revenue due to unexpected downtime. Salaried employees without the assets they need to do their job won’t be able to work, but you’ll still need to pay them. The health the return on your asset tracking investment depends on keeping operations running, and every missing asset makes that a more difficult chore.
Broken budgets
Depending on the state of your balance sheet, money lost to asset theft can snowball into a worse problem. Many hardware assets are essential to business operations, and the cost of immediately replacing them will need to come out of your budget. Without cash on hand, you may need to take out a loan. Businesses that are already operating in the red might find that a substantial theft of assets to be the final straw.
Leaked data
Personal employee logins might be stored alongside business databases on a company laptop or mobile device. You may even expose all your clients’ physical addresses or email addresses, if your CRM software is available on a stolen device. You might easily fall out of compliance with regulatory agencies like HIPAA or the SEC.
Sinking company culture
Lowered employee morale is a particularly insidious result of rising asset theft: Managers may start to see all their employees as potential thieves, causing employees to feel their work has been devalued. If the manager responds to theft with firmer regulations or micromanagement tactics, all employees will be forced to comply with more restrictions without a pay raise to compensate them.
As the saying goes, it only takes one person to ruin it for everyone.
How to Prevent Asset Theft at Your Business
To shut down asset theft, managers can try making a number of different investments in software, hardware, or changes to business practices.
- Try asset tracking software: With the right asset tracking system, you’ll be able to collect GPS signals that tell you the location, condition, and status of your assets at all times. Most systems will be an investment, but you can even find free asset tracking software as well.
- Or try an IT asset tracking system: IT assets are smaller office supplies, like laptops and phones. White collar operations can benefit from an IT asset tracking software, as it allows you to scan barcodes rather than pay for the pricier GPS trackers.
- Consider CCTV cameras: These offer a reviewable, visual record of physical asset comings and goings.
- Immobilize some assets: If your assets don’t need to be moved frequently (scanners, copiers, or printers, for instance), you can consider immobilizing them with a tether or a cable lock. Vehicles can be immobilized with a wheel boot.
- Conduct regular audits: Audits of your assets can catch thefts after the fact. However, this is also preventative, since the fact that your operation conducts regular asset inventory audits can itself deter opportunistic thieves from considering a heist.
In most cases, increasing asset visibility is the goal. Tracking systems, cameras, or even just increasing the light sources in your warehouse can make it easier to know where your assets are at all times.
Asset Theft: Key Takeaways and Next Steps
The best asset theft reduction plan will be one tailored to your specific business. The bottom line: Figure out ways to increase the visibility and the security of your assets without making your employees feel judged or micromanaged.
Some estimates put the average annual losses to asset theft and employee fraud at 5% of a business’s revenues. However, that never needs to be the case. The right asset tracking or security system will go a long way toward reducing your risk and keeping your business operating smoothly.