February 1, 2014
By David J. Sexton
The ‘what ifs’ are endless when it comes to threats in the jewellery industry. Each year, jewellers fall victim to crime and face unpredictable losses from fire, natural disasters, and even internal theft. So how can you possibly protect your business from the unknown?
There are several things you can do to ensure your safety. You can start by asking yourself, “Does this decision create a safer and more secure business environment?” From management decisions to everyday dos and don’ts, make safety and security a priority for your business and your staff.
A great place to start evaluating your business in terms of safety and security is to examine your insurance needs. Business owner policies (BOPs) were never intended to be comprehensive insurance coverage solution for jewellers. In fact, most limit or exclude coverage for jewellery inventory. Brokers and their jewellery customers need to consider insurance coverage that can be customized to meet the jewellery business’s individual and unique needs. They also need to work with an insurance specialist carrier who understands the jewellery industry and has the experience to guide them in making informed choices about their insurance protection.
A jewellers block policy is comprehensive coverage designed to meet the needs of a very broad spectrum of jewellery operations. This policy covers losses typical in the jewellery industry, such as burglary, robbery, distraction theft, fire damage, and water damage, to name a few.
Some jewellers block policies cover the following:
Coverage for jewellery displayed at trade shows, on the road with a sales representative, or loaned to a customer is also available as an option.
Work with a knowledgeable jewellers block specialist broker who can assist you in customizing and structuring the policy to cost-effectively meet the needs of your particular jewellery operation.
Once you know your insurance policy has been customized to meet your individual needs, it’s time to start building sound security habits within your retail store.
To select the appropriate limit of insurance coverage, you need to know what your exposure to loss can be. An effective and consistent inventory-control methodology is central to protecting your company’s assets. Conducting an annual physical inventory is one of the best things you can do to protect your business. Although every jewellery business may operate differently, there are inventory software solutions designed specifically for a variety of jewellery operations.
Your accountant, jewellery-specialist broker, or jewellery-specialist insurance carrier may be a great resource in helping you make an informed decision in selecting the inventory software solution that’s best for you.
To maintain accurate and current records, jewellers should update inventories daily. In addition to saving your purchase invoices and sales receipts for future reference, inventory records should chart the following information:
Remember, finished goods are not the only type of inventory your business may need to consider. Loose diamonds and coloured stones, settings, replacement materials, and customer repairs should also be included. For loose stones, each gem over .20 carats should be assigned a specific number and value on the day it was received. For gems less than .20 carats, stones that are purchased in bulk and are equal in colour, cut, and clarity can be inventoried by weight.
With a sound inventory methodology in place, you may turn your focus on security toward developing a business continuity plan. Preparing ahead of time for disaster recovery is crucial for a quick resumption of your operations and can allow you to make informed business decisions during a high-pressure crisis. Time spent on such a recovery process can translate into lost customers, as they may be forced to go to your competitors while you are closed for business. The longer you are shut down, the greater the risk of losing customers you may not be able to recapture.
Backing up files for everything from your tax returns to your lease to your most current inventory, and storing this information safely in an accessible, off-site location, can be a life saver. Copies of your insurance policies and contact information for your insurance broker, accountant, attorney, bank officer, alarm service provider, and safe vendors can make recovery go smoothly.
It is also wise to establish ongoing relationships with building contractors, cleaning services, and a realtor who can help you find an alternative location in the event your space is inoperable for an extended period. Don’t forget to maintain contact lists for your associates and vendors who may arrive at your business if they are unaware of your circumstances. Shipping companies that serve your business need to be contacted immediately to be given alternative delivery instructions to a more secure location.
A thorough business continuity plan also considers your customers. For instance, do you have access to your customer database if your store’s computers are somehow compromised? You’ll want to let them know if you’re temporarily closed or operating in a different location. You will also want to preserve your historical sales records and be ready to provide them.
Does your staff know what to do when disaster strikes? Whether it’s a fire, a tornado, a flood, or a robbery, you can help employees prepare to do the right thing by outlining clear procedures and expectations. Your insurer should have resources that can help you prepare a detailed plan for your business. Failing to plan is planning to fail!
In addition, you may want to consider installing a generator. On a smaller scale, a battery-powered radio, flashlights, extra batteries, fire-protection devices, and a first-aid kit are all good things to have on hand. Consider holding a fire drill during an all-staff training event or run through an evacuation scenario with employees and alarm company.
Conducting an armed robbery drill could mean the difference between life and death. Reinforce to your employees that their safety and that of your customers is your top priority, and establish a code word or phrase they can use to alert one another of suspicious behaviour or a potential threat. That phrase should cue an associate to visibly leave the store with a cell phone to observe from a safe distance, ready to call 911. Associates who remain in the store should be instructed to remain calm, not to resist, and to follow the perpetrator’s orders. Inventory and property can be replaced—a life cannot.
Insurance coverage, effective inventory record keeping, business continuity plans, and staff drills are all management decisions that safeguard and secure the business. Yet, don’t overlook the daily habits you can encourage among your sales team to discourage crime. Here are a few dos and don’ts.
Do: Schedule at least two employees to open and close the store. One should watch from a safe distance as the other opens the door and inspects the premise.
Do: Relock the door as soon as you enter the business and keep back and side entrances locked at all times.
Do: Greet every customer as they enter the store and make eye contact. Legitimate customers will appreciate the service. Would-be thieves, however, may be discouraged from perpetrating a grab-and-run or distraction theft.
Don’t: Do not group high-value merchandise in one area of the store or near entrances. Instead, distribute these items throughout the store in easy-to-monitor locations away from exits.
Don’t: Do not show more than one item at a time, especially high-value items. Having multiple items out of the case makes a grab-and-run theft easier for criminals.
Don’t: Do not leave display cases unlocked at any time, even as you show one item and then the next. Make a habit of carrying keys on wrist holders and locking the case every time you open or close it.
The time to consider your company’s vulnerabilities and to develop more secure habits in your business is now. Don’t wait until disaster strikes. Invest the time and energy in protecting your employees, your business, and your way of life before it’s too late.
David J. Sexton, CPCU, is vice-president of loss prevention at Jewelers Mutual Insurance Co., in the United States. A graduate of the University of Wisconsin, Sexton serves on the Underwriters’ Laboratories’ (UL) Security Systems Council, where he is a corporate member of the insurance category. He also sits on the board of directors for Jewellers Vigilance Canada (JVC), and worked on the Central Station Alarm Association’s (CSAA’s) Insurance Liaison Committee that assisted in the development of the UL burglar alarm modular certificate program and revised UL standard. Comments and questions can be sent to firstname.lastname@example.org.
For training resources regarding safety and security when carrying or working with jewellery, visit JM University at JewelersMutual.com. Jewelers Mutual Insurance Company is the only company specializing exclusively in jewellery insurance in the United States and Canada. It is licensed in all 50 U.S. states and Canada.
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