Physical Security Incidents Cost Companies $1 Trillion

Security and facility services industry leader Allied Universal recently released its World Security Report 2023. The report anonymously documents the opinions and data of 1775 security professionals in 30 countries, indicating that security incidents will cost one trillion dollars in 2022. 

Security incidents also led to a loss in corporate value and a fall in company stock prices. The companies that participated in the survey boast a combined annual revenue of over twenty trillion dollars for 2022.

Allied Universal partners with more than 400 Fortune 500 companies. This security service provider operates in over 100 countries worldwide with an annual revenue exceeding twenty billion dollars. It is the seventh-largest private employer in the world.

Allied Universal’s global chairman and CEO, Steve Jones, stated, “As the world’s leading security company, we commissioned this report for the benefit of the entire industry and the companies we protect. It comes at a time when organizations across the globe are increasingly navigating more complex security hazards and threats. The research shows the impact of security threats on organizations is multidimensional – from disruption of productivity to the loss of customers, to the potentially staggering financial impact.”

Economic unrest

Responding companies anticipate increased threats due to climate change, theft, fraud, and general social unrest. However, the most significant hazard expected to impact security needs and budgets is economic unrest, with 47% of survey participants citing unrest as their greatest expected threat within the next twelve months. This percentage significantly increased from the 39% of security officers that mentioned it the previous year.

Economic unrest might include war, political instability, economic recession, interest rate rises, inflation, pandemics, and climate change. Any event that can cause or contribute to unrest within society can impact security and lead to a loss of customers and productivity with devastating financial consequences.

The research was not only limited to security officers but also explored the opinions of 200 international institutional investors in an attempt to evaluate the depth of security incident impacts on publicly traded companies. The investors surveyed approximated a 29% average loss in stock prices within the last year after a critical security incident.

External and internal threats

International businesses face increasing security threats with new risks and new technology requiring new skill sets. Physical security and cybersecurity can no longer be treated separately and are now among top corporate priorities. 

The use of deception for gain, or fraud, is considered the number one external threat in the next year. At the same time, the loss or leaking of sensitive data is expected to be the most significant internal threat for companies. 

Company security officers expect a substantial increase in threats posed by spies, hackers, and financial criminals, with 50% of respondents expecting to be impacted by incidents involving protestors, subversives, hackers, or spies and 49% predicting economic criminal hazards to affect their businesses. The threats posed by both groups were cited by 39% of security professionals only a year earlier, showing a noteworthy increase.

Other critical security threats include:

Climate change: With natural disasters on the rise, 38% of security officers surveyed placed climate change as the second most concerning threat after economic unrest for the coming year.

Sensitive data leakage: 36% of survey respondents expect sensitive data leakage to be the most significant internal corporate threat in the next twelve months.

Misuse of company data and resources: The misuse of company information and resources was reported by 35% of surveyed officers as the most common internal threat experienced in the past year.

Corporate security budgets

Allied Universal reports that physical security budgets are expected to rise significantly within the next year in 46% of the companies that responded to the survey and that 42% intend to invest in Artificial Intelligence and AI surveillance over five years to increase physical security and keep assets and property safe.

In conclusion

Traditional physical security threats are no longer the only security problem facing corporate security professionals. According to this report, cyber threats increasingly challenge physical security operations as new technology, such as a cloud-based commercial CCTV system, is increasingly integrated into security platforms. 

Security officers reported that this has led to many corporate managements placing more importance on cyber security than physical security; with physical security and cyber security being so deeply interconnected thanks to technological advancements, global corporate interests can no longer afford to view or organize physical and cyber security as anything but the same.