Being Perceptive to Workplace Violence

In the summer of 2010, a driver accused of stealing beer from the Connecticut beer distributor he worked for, killed eight workers before turning the weapon on himself. According to one union official, the worker ran through the warehouse with the gun and “all hell broke loose.”

Earlier in 2010, eight employees were shot, three of them critically, at a St. Louis manufacturing facility. In this case as well, the gunman committed suicide after taking the lives of co-workers.

Violence in the workplace is a threat that most executives take seriously but few actually plan for. It is a risk however, that cannot be ignored. Aside from the ethical obligation of providing a safe and secure work environment for employees, there is also a legal responsibility as well. As some companies have already learned, failing to do so can result in serious injury or fatality, damaging media publicity, employee morale issues and costly litigation.

It is important to understand that a relatively small percentage of workplace violence is spontaneous. The preponderance of the time, there are warning signals. Although subtle, they are oftentimes present and recognizing them can mean the difference between being caught by surprise or preempting violence from occurring in your company.

Media reports indicated that in the case of the Connecticut beer distributor, the driver’s actions might have been prompted by racial harassment. Whether or not this allegation had merit is in question. However, in matters of workplace homicides, it’s the perception of the individual that matters. If an employee’s sense of reality is that they have been wronged in some excessive or ongoing manner, whether it’s actually true becomes irrelevant from a risk perspective.

Extreme workplace violence takes place more frequently than most realize. These incidents are not confined to commercial establishments either, as evidenced by the shootings of six employees at the University of Alabama’s Huntsville campus in February 2010, or the shootings at the U.S. Army’s Ft. Hood in Texas where 13 died.

An ABC news article quoted Dr. Paul Ragan, senior consulting psychiatrist at Vanderbilt University Medical Center’s department of psychiatry, who stated, “Suicides and violence can increase in economic hard times. If anybody talks about an experience where they’ve been humiliated and they have feelings about it, it needs to be taken seriously. The workplace is often a source of disappointment, and is the unfortunate recipient of the person’s rage.”

Be Aware of Symptomatic Behavior

Here are some red flags that frequently precipitate violent acts. Providing this insight to managers and supervisors can enhance their awareness and perception, two important factors to preventing extreme job-related violence.

• Employees making threats or being threatened – Threats should never be downplayed or casually dismissed. While 99 out of 100 threats may not lead to violence, it is the one case you overlook that can cause irrevocable harm.

• Employees who anticipate a layoff or who are suddenly terminated – The anguish of losing a job can trigger an array of strong emotions, from anxiety to rage. Also, keep in mind that some employees do not wear their emotions on their sleeve. Consequently, it’s not always easy to anticipate their delayed reaction to job loss.

• Employees with serious problems at home – Oftentimes, domestic issues spill over into the workplace. Confrontations can range from assault to homicide.

• Employees using medication or illegal drugs – Mind-altering substances can exacerbate an individual’s state of mind, sometimes causing behavior completely out of character.

• Employees who display signs of paranoia – Be aware of employees who feel that they are being targeted for unjust criticism or ridicule by superiors or co-workers. While they may appear outwardly passive, they may eventually retaliate and seek revenge. Also, keep in mind that certain drugs, such as cocaine, can dramatically increase an individual’s level of paranoia.

• Employees showing a fascination for weapons – Obviously, the most significant problems involve violent acts committed with handguns and assault weapons.

Why Your Employee Dishonesty Insurance May Not Pay a Legitimate Claim

Insuring your company from employee theft is a unique form of coverage, different from loss caused by fire, flood, or even break and entry. Very few executives understand how it works, which is why so many legitimate claims are rejected each year.

If your facility is damaged by fire, water or forced entry, the physical evidence is apparent. It is essentially a matter for the insured to document the damage, tally the destroyed or missing inventory, and notify the insurance company. When it comes to documenting internal theft, however, you’re dealing with significantly different variables.

To begin with, your alarm system will not be going off in the middle of the night providing you with immediate notification that you’ve been victimized. Internal theft is a silent predator, normally taking place for months, and sometimes even years, before management becomes aware of its existence.

Another difference is the lack of readily available physical evidence that clearly proves the loss was caused by dishonest personnel. Most firms come to the realization that they are missing product only after receiving troublesome inventory reports or a confidential tip. Some warehousing executives wrongfully assume that inventory loss is the result of an operational problem, such as a software glitch, product mis-selections, or counting errors by inventory personnel, and the theft continues.

When management finally does become convinced that their loss is dishonesty related, they are faced with the difficult task of uncovering and documenting it. Unfortunately, this is not simply a matter of taking photographs of for example, water-damaged inventory. After all, it is hard to photograph product that has vanished.

It is safe to say that your insurance company will not be running to your door with a check simply because you notify them that you’ve been victimized by internal theft.

Most policies state that an insured must provide independent proof, in addition to a profit and loss statement, or inventory report, that corroborates that the theft was, in fact, committed by company employees. Consequently, the firm incurring the loss has the responsibility of performing an investigation and compiling evidence that proves that one or more employees stole the missing inventory. Without this independent corroboration, your financial computations alone simply will not count for much.

When properly prepared, and in conjunction with accurate financial computations, these forms of corroboration put the odds in your favor of having an inventory theft claim honored by your insurance company.

Undercover Reports – Factual observations made by a professional investigator working alongside company thieves.

Video Evidence – New technology makes it possible to conceal cameras inside smoke detectors, sprinkler heads and wall clocks, virtually undetectable.

Covert Surveillance Reports – Investigators who witness employees removing product from your warehouse or truck drivers delivering product to unauthorized locations.

Admissions of Guilt – Confession statements must be properly prepared and witnessed so it is clear that dishonest workers made their admissions without any duress, undue influence or coercion of any type.

2011 C-TPAT Conference

U.S. Customs & Border Protection recently held its annual Customs-Trade Partnership Against Terrorism Conference in San Diego, and once again this sold out gathering featured top caliber speakers.

In keeping with the theme, “A Decade of Supply Chain Security & Innovation”, Bradd Skinner, Director of the C-TPAT program, reflected upon the progress made in the last 10 years. Conceived in 2001 with only a handful of U.S. importers, C-TPAT now has over 10,000 business entities that have received C-TPAT certification. Globally, the C-TPAT program has become recognized as the standard for supply chain security excellence.

Director Skinner also provided insight into a number of important issues, including future direction for this historic program.

One of the points he made was the emphasis that C-TPAT will now place on “evidence of implementation“ during validations. Being actively involved with validations domestically and internationally, I’ve experienced this new focus firsthand. Whereas, the Supply Chain Security Specialist teams used to accept documents that simply formalized supply chain security policies and procedures, companies being validated are now required to prove that they are in fact being diligently followed.

When I was a speaker at the 2010 C-TPAT conference, I made the statement that most security programs look much better on paper than they actually work in reality. Danbee Investigations has performed supply chain security investigations and audits for over 25 years, ranging from inventory theft, sabotage, product tampering, and counterfeiting, to workplace substance abuse/distribution and smuggling.

We’ve repeatedly found the most major security breaches were the result of companies believing that their safeguards were far more effective than they ultimately proved to be. Company executives wrongly assumed that their asset protection safeguards incorporated best industry practices and were being diligently followed on a day-to-day basis. The reality for these companies was that many vulnerabilities existed, and were subsequently exploited.

By C-TPAT requiring companies to show proof of implementation, they will expose those companies not fully committed to implementing and consistently maintaining meaningful safeguards throughout their supply chain. Essentially, it is the “trust but verify” concept at work.

The February 2011 Global Awareness Bulletin published by the U.S. Department of State warns that American companies doing business in foreign countries may be targeted more aggressively by terrorist organizations like al-Qa’ida. Terrorists measure success not just in the number of victims but by the financial damage and long term costs associated with additional regulations governments are forced to enact to deter future terrorist incidents. Consequently, because of dramatically reduced inspection rates, C-TPAT certified companies automatically become high value targets.

If a C-TPAT member has superficial supply chain security controls in place they are at significatly higher risk of unknowingly transporting a conventional, biological, chemical or nuclear weapon into the United States. Obviously, safety is the number one concern. However, the ensuing panic, the widespread economic ramifications both domestically and abroad, as well as the financial and legal consequences for the company that imported the weapon of mass destruction would be catastrophic.

CBP’s mission is a daunting one. Unlike baseball, a .500 or .600 batting average will equate to failure rather than Hall of Fame status. While import volume to the U.S. may make perfection an unrealistic objective, striving for anything less creates an unacceptable level of risk. That’s why I not only understand CBP requiring evidence of implementation, I fully support this initiative.

Avoiding Pitfalls When Conducting Foreign Supply Chain Security Audits

by Barry Brandman

Here are two reasons why supply chain security should be taken seriously:

1. If your safeguards look considerably better on paper than they work in reality, your company faces the risk of having illegal narcotics or a weapon of mass destruction smuggled into the United States via one of your shipments.

2. The other risk you face is that when C-TPAT inspectors validate your foreign suppliers and logistics providers, they may find your controls woefully inadequate and lower your tier level or even remove you from the C-TPAT program.

If you want to protect your import shipments from theft, smuggling and terrorism, you’ll need to have a diligent auditing process in place. Aside from it being a C-TPAT requirement, it’s also one of the most critical components of your security program.

One of the primary objectives when performing a comprehensive security audit is to separate fact from fiction.

Prior to conducting one of our C-TPAT compliance audits at a foreign distribution center, we had been assured that all their security controls were being diligently followed and our client’s product was extremely well protected.

Prior to our arrival, this consolidator had informed us that they had complete video coverage throughout their facility, tight control over inbound and outbound goods and that our clients’ product was always kept in a highly secured segregated area.

What we observed however was quiet different. Not only were the CCTV camera views providing terrible clarity, but our client’s goods were not being monitored from the time they were taken off an inbound truck to the time they were eventually reloaded for transport to the Hong Kong seaport. There were numerous “blind spots” where our client’s product could have been tampered with and completely avoided observation by their video system

We found that their digital hard drive was much too small, only archiving recorded video for 7 days – an inadequate period of time in the event that a post event investigation was required in the future.

We also exposed loopholes with their cargo handling practices. Inbound truck security seals for example, were being removed by anyone working on the receiving dock rather than by more senior personnel (which is what their policy called for). Consequently, we found that many workers did not take the time to verify that the seal number on an arriving truck matched the manifest (another major policy violation).

We also found that the seals used on outbound trucks were left exposed in an open box on the shipping dock, fully accessible to all employees, vendors and outside truckers. Because the shipping crew didn’t use seals in numerical sequence, these exposed seals could have been stolen and then reattached to a truck’s cargo doors after a driver left their facility.

Insofar as our client’s product being segregated “in a highly secured area”, we observed that the fencing was only 8’ high and had no ceiling to protect against employees simply climbing over it. We also found that  the keypad code to this area hadn’t been changed in nearly nine months and was known to most of the workforce (including those without clearance to this area). Additionally, we determined that the alarm system was only being armed at the end of each workday, even when there was no work being performed in this area for hours at a time.

These issues, as well as an array of other security loopholes that were exposed, were promptly addressed and remedied. However, had this audit not been performed, our client’s risk factor would have remained unnecessarily high.

Training is another important component, yet it’s frequently not provided when an on site assessment is performed. During a recent C-TPAT training program we conducted for a foreign manufacturer, we asked if anyone knew whether bolt seals could be circumvented. Ninety percent of those in attendance responded that it was impossible to manipulate them. The problem here is that bolt seals can in fact be circumvented a number of ways and if those responsible for seal integrity think they’re foolproof, they’ll never recognize and expose breaches when they do occur.

When evaluating the quality of a foreign site’s security program, it’s’ also important to avoid “getting lost in the translation.” Because C-TPAT focuses on imports, working with foreign companies is commonplace.

Cultural differences and language barriers can result in misleading responses and faulty conclusions. It’s for this reason that we deliberately ask the same questions several times (although they are worded differently) in our supply chain security questionnaires sent out to foreign suppliers and logistics providers. When respondents answer yes on page one and no on page five to the same question, we know that they either didn’t understand what we were asking or weren’t providing us with accurate responses.

It’s also a good idea to confirm questionnaire responses through follow up e-mails and conference calls. More often than not, we receive feedback that differs from many of the original answers that were provided to us.

Is it a case of some foreign firms wanting to look more secure than they really are for their U.S. based customers? Or, did the respondents have different interpretations of words or phrases, resulting in inaccurate feedback?

Whatever the reason, you can’t afford to be inadvertently or deliberately misled if you want to know that your supply chain is in fact as secure as it needs to be.

Annual C-TPAT Conference

by Barry Brandman

Last week I attended the Customs-Trade Partnership Against Terrorism annual conference in Anaheim, California. This much anticipated event sold out within hours of being announced on the Customs & Border Protection website.

This annual conference not only provides certified member companies with the opportunity to learn about the state of the program and interact with senior government officials, but also receive a briefing about changes that will be taking place with the C-TPAT program.

The roster of speakers was impressive, and included David Aguilar, the acting Deputy Commissioner of U.S. Customs & Border Protection, Bradd Skinner, Director of the C-TPAT program, Kevin Weeks, Director of Field Operations for CBP’s Los Angeles office, as well as Richard Dinucci, CBP’s Director of Cargo Control. Director Skinner discussed an array of topics, including the C-TPAT program’s growth, up 7.8% in 2009 and expected to exceed 10,000 member companies this year.

Conference sessions also featured speakers from the private sector, who provided insight from the industry perspective.

I was asked to give a presentation on “Tools, Technologies and Processes – Innovative Industry Solutions to Security Challenges.” I focused on areas within the foreign supply chain where we have uncovered significant risk and gave specific examples of why many corporate security programs look much better on paper than they actually operate on a day-to-day basis. I also explained several of the most important safeguards of a world class supply chain asset protection program, including how to design state-of-the-art intrusion detection and video systems, as well as how to get the most from GPS tracking technology and cargo security Best Practices.

There is no question that the C-TPAT program has become respected worldwide, with many countries developing their own supply chain security programs modeled on C-TPAT standards. Other countries like Japan, Canada and Jordan have already entered into mutual recognition programs with the United States, which is beneficial for the government as well as the trade community.

I believe that C-TPAT is a critical component of our homeland security efforts. This government–industry cooperative program proves that when these two sectors work together effectively towards a common objective, very significant results can be achieved.

2010 Supply Chain Security Webinar

by Barry Brandman

Today, I participated as a guest speaker for the 2010 Supply Chain Security Webinar.

This program focused on strategies for minimizing supply chain security risk, a growing concern for manufacturers, distributors, and transportation companies. Along with myself, experts from Cisco, Powers International, Customs & Trade Solutions, Accenture, as well as the National Custom Brokers & Forwarders Association and the Air Forwarders Association gave presentations.

My session was entitled, “Are Your Profits Quietly Being Stolen – What Every Supply Chain Company Should Know.” One of the areas I focused on was seven of the biggest myths about distribution center security. I explained why, for example, common misconceptions such as “If we sustain a theft due to a faulty intrusion detection system, our alarm company will be responsible” and “Our camera system will keep our workers honest” have caused companies significant loss.

I also explained some of the essential components of a successful loss prevention program and why it’s so important to realistically assess your safeguards so you can uncover weaknesses before others have the opportunity to exploit them.

One of the ever present concerns for logistics executives is collusion between inside personnel and truckers. With cargo crime estimated between $20-40 billion a year, companies are eager to learn which methods and technologies can effectively prevent and detect this type of criminal activity. As a result, I made it a point to provide some proactive solutions that have dramatically reduced this costly problem for many of our clients.

The 7 Deadly Sins of Logistics Security

It’s estimated that the cost of business crime in the United States now exceeds $100 billion a year and is responsible for nearly 1/3 of all corporate bankruptcies. In a survey taken by a national accounting firm, nearly 25% of the respondents reported that theft related losses in their respective firms exceeded $1 million.

Most wholesalers, consolidators, freight forwarders and distributors that find themselves victimized by internal theft share a common denominator: They have usually committed one or more of what I refer to as The 7 Deadly Sins of Logistics Security.

Is your company guilty of making any of these costly mistakes?

1.  Are you relying on safeguards that simply don’t work?

Ask most executives how they protect their inventory and they’ll answer “alarms, guards and closed circuit television.” If these security solutions are effective, then why is it that so many companies that sustain loss have these controls in place?

Alarms are designed to protect against break and entry, not theft committed by insiders – which is how inventory loss usually occurs. Most uniformed guards are not adequately trained to recognize internal theft and collusion. Closed circuit television will only be effective if it has been strategically designed and consistently monitored, which is typically not the case.

2. Do you make it easy for dock personnel to work in collusion with truckers?

Because they don’t know how to prevent internal theft, many companies inadvertently make it too easy for drivers to work in unison with shippers, receivers, checkers and loaders. These theft schemes are silent, with no bells or whistles going off to alert anyone that they are taking place, which is why they oftentimes add up to a small fortune.

3. Is your company too reactive?

A large percentage of companies that incur shrinkage do little to prevent it from happening in the first place. By the time they decide to take action, they’ve already incurred a substantial loss and the missing inventory is never recovered.

It’s been repeatedly proven that preventing loss is far less expensive then reacting to it.

4. Do you have an efficient way for concerned employees to report security problems?

A confidential hotline can be an invaluable tool to learn about individual theft, collusion, fraud, workplace substance abuse, arson, product tampering, harassment or discrimination. Yet, many companies still rely on methods of communication that don’t work for security sensitive issues like these, such as open door policies or in-house tiplines. As a result, employees who become aware of unethical or illegal activity tend to remain silent.

In order for a tipline program to be successful it should be outsourced so workers can speak to people who won’t recognize their voices. Employees are more likely to confide in someone outside their company, rather than using an in-house system for tips.

Equally important, callers should never have to provide their name. The best response comes when you offer complete anonymity. The way we accomplish this with the Danbee Hotline for example, is to provide every caller with a code number, which is one reason why we’ve received information that has exposed millions of dollars of losses.

5. Are you  checking your checkers?

Too many companies have made the mistake of not keeping their checkers accountable. Because of this lack of oversight, a percentage of checkers become negligent or dishonest over time, and that’s when companies can rack up substantial losses.

One effective way to control the accuracy and integrity of your checkers is by having loss prevention audits regularly performed. These can be done numerous ways.

One method would be to have a security representative arrive (without any advance notification) during the time your trucks are being loaded, select one (or several) and reconcile the product found on the trucks to the shipping manifests.

Another technique would be having surprise audits performed on your trucks as drivers begin their route deliveries. We refer to these as non-covert surveillances. By having an investigator meet a driver at their first stop and performing a verification of each piece delivered throughout the course of the day, you will uncover product that has been over-loaded.

Both of these security techniques are excellent ways to not only detect collusion or gross negligence, but they will also prevent it from taking place.

6. Does your company effectively weed out on-the-job substance abusers and distributors?

Nearly 90% of all employee drug users either deal or steal to support their addiction. As many distribution executives have learned, if you have a drug problem inside your company, you can expect to have a theft problem as well.

Two of the best ways to identify drug users and distributors on your payroll is through the use of a tipline program or by inserting an undercover investigator into your operation.

7. Do you provide meaningful training for your key personnel?

All too often, losses occur because managers and supervisors are not educated on how to recognize the subtle, ingenious ways that theft takes place in a distribution center. Keep in mind that much of this theft and collusion looks exactly like standard operating procedure. The reality is that if your key people don’t know what they’re looking for, they probably won’t see it.