Risk Assessments as a Revenue Generator

by William F. Blake, MS, CPP, CFE

When attempting to identify the risks and threats to your business, it is wise to think like an attorney and look for risks and threats that could provide areas which could be construed to be possible hazards. Below are some of the possible security deficiencies found in negligent security litigation cases:

• Lack of awareness of current crime conditions at the property and in the surrounding community.
• Inadequate or outdated security plans and procedures.
• Not consistently following established security plans or procedures.
• Lack of adequate employee safety and security training.
• Inadequate physical security measures.
• Lack of adequate security staff.
• Failure to conduct security background checks on employees and contractors.
• Inadequate lighting at building entrances, parking garages, or exterior parking lots.
• Poorly maintained facilities—broken doors and locks, overgrown landscaping, etc.
• Inoperative or poorly maintained security system equipment: defective cameras, inoperative panic alarms, etc.
• Ignoring complaints about crime or security from tenants, employees, customers, and guests.
• Failure to take workplace violence threats seriously.
• Inconsistencies in security staffing that are not supported by risk assessment data; for example, having cameras in one area of the facility but not another exclusively for budgetary reasons.
• Over representing or overselling the level of security that is provided; for example, using statements such as “security building,” “completely safe,” “crime-free,” or stating that areas are under “24–hour surveillance” when in fact they are not.
• Reducing the level of security provided at the facility for budgetary reasons without a corresponding reduction in the level of security risk.
• Ignoring increased levels of crime in the surrounding neighborhood and while failing to make improvements in the facility’s security program.
• Failing to provide a level of security that is equal to or greater than that provided in similar neighborhood facilities.
• Failure to adequately protect confidential information such as employee records, medical records, credit information, or proprietary information owned by others.

Negligent Security Verdicts and Settlements Separated by Crime
In a study titled “Major Developments in Premises Security Liability III”, by Norman D. Bates, Esq., Bates reviewed 1,086 negligent security cases existing over a period of several years (1992 to 2001). Mr. Bates determined the majority of negligent security lawsuits involve assault and battery cases (42 percent), followed by sex assault and rape claims (26 percent), wrongful death (15 percent), robbery (nine percent), and false imprisonment (four percent). The remaining percentage (four percent) fell into a miscellaneous category, like arson, home invasions, and carjacking.

No single industry dominated robbery negligent security claims. The most commonly named Defendants were: hotels and stores, shopping malls, apartment complexes, and restaurants.

No single industry dominated the negligent security rape cases. The rape and wrongful death cases had higher jury verdicts when compared to robbery and assault cases. Apartment complexes and condominiums lead in rape cases. Hospitals and nursing homes were second and hotels and management companies were sued in 26 cases each. Both malls and private security companies were named Defendants in 23 cases each. While apartments lead the rape location statistics, rapes in hospitals/nursing homes/rehabilitation centers are drastically increasing; many security rape cases now take place in nursing homes.

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The negligent security analysis looked at more than 700 assault cases, which resulted in civil litigation. Common Defendants were churches, bars (nightclub-shooting), restaurants, ATMs (atm-shooting), movie theaters, apartment complexes, and trailer parks. The most frequent offenders in assault inadequate security cases were bars and nightclubs (nightclub-shooting) (85 cases), primarily for bar fights resulting in serious injury or death. Condominiums and apartment complexes came in second for assault injury lawsuits, comprising 76 of the 700+ assault claims. Restaurants were the third most commonly named defendant in failure to provide security trials at 70 claims. Stores were next at 52 cases; security companies came in fifth at 46 negligent security lawsuits.

Negligent Security Trials: Who Wins More Often?
The study shows that defendants won 52 percent of the negligent security jury trials out of the 1,086 cases studied. 21 percent of the time, the plaintiff received a winning verdict. 19 percent of cases were continued or sent back to be re-tried. Eight percent of the cases resulted in confidential settlements, typically involving the defendant paying the plaintiff some money.

Most plaintiffs (70 percent) were customers or guests of the business. Employees of the defendant make up 17 percent of plaintiffs. Seven percent are unknown due to the confidentiality of the settlement. One percent of plaintiffs were trespassers.

Compared to the negligent security lawsuit study from the 1990s, the new study shows that plaintiffs won more trials in the 90s compared to the present. However, the newer study shows that juries are awarding higher verdicts now when the plaintiff does win. So why the change? More cases are settling, so it is possible that the truly explosive plaintiff cases resolved before trial.

Negligent Security Case Values
Of the 21 percent of trials that the plaintiff won:

• 40 percent of the cases were amounts less than $250,000
• 16 percent fell in the $250,000 and $500,000 category
• 13 percent were between $501,000 and $1 million
• 13 percent were between $1,000,001 and $2,000,000
• 10 percent were between $2-$5 million
• Eight percent of these cases were more than $5 million

Inadequately Secured Locations
The most frequent location for negligent security cases was a parking lot. Apartment buildings were second. Other frequent locations were stores, exterior common areas, bars, and schools.

Negligent Security Settlements
Apartment operating companies paid a median of $1.5 million in damages from jury awards and $1.7 million in out-of-court settlements. Retail stores paid a median of $1.7 million from jury verdicts and averaged a settlement of $1.2 million. Hotels paid an average of one million dollars in jury verdicts and $632,000 in pretrial settlements. Restaurants paid an average of $600,000 in jury verdict awards and settled on average for $2.8 million for their negligent security lawsuits.

Settlements and Verdicts Based on Injury
Wrongful death averaged the most significant jury verdicts at $2.8 million. Second were robberies, with a median jury verdict of $1.9 million and a median settlement of $1.6 million. Inadequate security rape lawsuits resulted in an average of $1.5 million in jury verdicts and settled on an average of $1.2 million. Injured victims of assault and battery cases obtained average jury verdicts of $1.2 million and a median pretrial settlement of $1.1 million.

Negligent Security Cases Brought by Employees
Negligent security cases based on failing to provide adequate security measures (lighting, locks, fencing, security guards) result in larger settlements and jury verdicts versus cases where a business employee caused harm. Employers still owe a duty to their employees to keep them safe and out of harm’s way. If an employee is raped, attacked, shot, or murdered while on the job, the employer may be held responsible via a negligent security lawsuit. If an employee attacks a patron or customer, the employer may be responsible for failing to properly screen the employee before hiring him. These employee-based lawsuits are premised on negligent hiring, negligent retention, and negligent employee supervision.

The average income for PIs and security consultants varies based on the business location, education, experience, and other regional factors. The U.S. national averages for PIs range from $55,702 to $54,302. The U.S. national averages for security consultants range from $73,544 to $108,230. These numbers presented are a very true reflection of all the hazards your business could face. It’s best to be prepared for the potential risk and routinely inspect where your business model could improve.

About the Author
William F. Blake has over 60 years of experience as an investigator and security consultant. He is a retired U.S. Army Chief Warrant Officer, where he was a Criminal Investigation Special Agent field agent, Operations Officer, Unit Commander, Staff Officer, and Criminal Investigation Instructor. He was certified by examination in 1986 as a Certified Protection Professional by ASIS International and in 1990 as a Certified Fraud Examiner by the Association of Certified Fraud Examiners. He is a member of Intellenet.