According to the Merriam-Webster Dictionary, “resilience” is defined as “an ability to recover from or adjust easily to misfortune or change.” For purposes of this discussion, I would modify this definition as follows: Resilience is the ability of a business or corporation to anticipate and prepare for business disruption or economic crisis in order to minimize the disruption, quickly recover, and potentially out-perform competitors both during and following the crisis.
While the term resilience is not necessarily a common term in the retail loss prevention industry, this definition alludes to many of the functions within the retail enterprise that LP professionals and their peers are familiar with, such as asset protection, risk management, crisis planning, disaster recovery, and business continuity. Resilience, as it has come to be used over the past several years, includes all these functions and more that are coordinated at the C-level to build an organization that not only survives crises, but thrives following business disruption. This is where the chief resilience officer (CRO) role comes into play.
How Does Resilience Produce Value?
In 2020 the Boston Consulting Group (BCG) published the results of their quantitative research of 1,800 companies that showed that “resilient companies enjoy better outcomes than their peers on one or more of three dimensions: First, the immediate impact of an external shock on their performance can be lower than their peers. Second, the speed of their recovery can be higher than their peers. Finally, the extent of their recovery can be higher than peers.” The report illustrated their findings as shown here:
According to the BCG report, the way that resilient companies achieve superior performance in crises is by creating four types of advantages:
- Anticipation advantage— The ability to recognize threats and prepare for them in advance, which helps cushion the immediate impact and improve recovery speed.
- Cushioning advantage— The ability to withstand the initial shock, which helps in cushioning the immediate impact.
- Adaptation advantage— The ability to quickly identify the actions needed to restore operations and implement them swiftly, which helps improve recovery speed and achieve a greater extent of recovery.
- Shaping advantage— The ability to shape the dynamics of the industry in the post-shock environment, which helps in achieving a greater extent of recovery.
The BCG study looked at a wide variety of business disruptions over a twenty‑five-year period that included major economic recessions, such as the dot-com bubble, the 2008 global financial crisis, and the COVID-19 pandemic as well as market specific disruptions such as the 2015–2016 energy crisis caused by the drop in oil prices. One could argue that the findings could be applied to the recent global logistics disruption and the current organized retail crime crisis that have impacted retailers for the past few years.
The Emergence of the Chief Resilience Officer
As mentioned above, building a resilient organization requires coordination of all parts of the enterprise that is managed at the C-level by an individual whose sole responsibility is to focus on building organizational resilience. In a 2021 article in Forbes titled “The Rise of the Chief Resilience Officer,” the author states: “Such an individual is a master at bridging departmental divides and driving coordinated action across different areas of the business. Most importantly, they’re able to build effective processes and decision‑making frameworks so an organization can respond with agility in the event of disruption. To do that, though, they must be a member of the C-suite and peer to other C-level execs.”
One might ask how a CRO differs from a chief risk officer. The Forbes article argued, “At first glance, they’re one and the same, but done right, they’re complements who work hand in hand. While a risk officer focuses on systematic risk management (helping organizations embrace upside opportunities by accepting or mitigating downside risks), a resilience officer works on effective responses when those risks become a reality. As a result, organizations with a strong CRO can not only restore operations quickly after an adverse event but actually create a business advantage, too.”
Laurie Ann Scotti, a veteran professional working in the resiliency industry and member of the ASIS Crisis Management and Business Continuity Steering Committee, also supports the need for a CRO, even if a company has a chief risk officer. “The intelligence derived from a good planning team and program leader presents a huge competitive advantage,” she said. “No other program or team gets to know a company’s inner workings better. As they document and build plans and strategies for response and recovery, the team a CRO leads becomes a valued extension of teams across the enterprise. The work is substantially based on trust as business and IT talk about both strengths and weaknesses while looking for solutions in a world of change. Using good data structure and reporting, a CRO can factually represent interdependencies that are often not seen in siloed workspaces. These illustrations present both operational and strategic advantages in day-to-day and long-term decision-making.”
Promoting LP Executives to Chief Resilience Officers
The CRO has become a common function in city and state government organizations as well as a few select corporations. However, based on discussions with several retail professionals and a search on LinkedIn, the CRO role does not currently exist in retail—with one exception: The US Coast Guard (USCG) Community Services Command (CSC).
Like the Navy Exchange Service Command (NEXCOM) and the Army and Air Force Exchange Service (AAFES), the Coast Guard branch of the US military has a network of retail and food service locations serving active-duty Coast Guard members and their families, as well as other authorized patrons like service-connected disabled veterans, Department of Defense civilians, and Department of Homeland Security personnel. Each of these military branches employ loss prevention and asset protection professionals whose responsibilities parallel traditional retail LP organizations. Many of the executives involved in these military exchange organizations over the years have been active in the loss prevention industry and played leadership roles in contributing to the growth and evolution of the retail LP profession.
The Coast Guard CSC organization recently restructured its Loss Prevention Directorate into the Business Resilience Directorate. Jim Palmer, who was the chief security officer and is now the chief resilience officer, leads this transformation—possibly the first CRO in retail and likely the first LP professional to hold such a position. I interviewed Palmer and the commanding officer of the CSC to discuss the genesis of this new role.
After a three-year enlistment in the US Army, Palmer began his career in retail LP with Lord & Taylor in 1996 before stints with LP Innovations and Total Wine & More where he started Total Wine’s LP organization. In 2008 he joined the Coast Guard Exchange to, once again, build a loss prevention program. For the past fifteen years, his responsibilities were primarily focused on protection of the Coast Guard Exchange (CGX) and the Coast Guard’s Morale, Well Being, and Recreation (MWR) Program assets, people, and property, which included preventing theft, minimizing shrink, investigations, and certain safety and physical security duties.
In early 2023, during his annual evaluation with the CSC Commanding Officer Captain Robert Taylor, the two discussed how Palmer’s organization might evolve to take on a greater breadth of responsibilities. Around that same time, Palmer read the Forbes article referenced previously about the rise of the CRO role, which triggered his thinking about how that role might fit the CSC organization.
After additional research, Palmer put together a PowerPoint presentation that outlined how he envisioned transforming what was then called the Loss Prevention and Security Directorate into the Business Resilience Directorate. He discussed his plan with his fellow members of the CSC leadership team and ultimately presented it at their annual offsite strategic planning conference in early fall 2023. His presentation was well received, and the organizational change followed shortly thereafter.
The CRO Reorganization Argument
In Palmer’s reorganization proposal, he defined the CRO role like this: “Chief resilience officers develop, maintain, or implement business continuity and disaster mitigation and recovery strategies and solutions, including risk assessments, business impact analyses, strategy selection, and documentation of procedures. CROs help organizations remain competitive, agile, and responsive to emerging issues. They also help ensure the integrity of an organization’s reputation, increasing financial stability, and long-term growth.”
He suggested that the transformation and modernization of the loss prevention function would encompass a comprehensive vision of serving the overall organization. “Business resilience leads from the front and allows the CRO to take a much broader role,” Palmer said, “further ensuring and solidifying the protection of people, assets, and property. Simply put, protecting the benefit alone is not enough” given the Coast Guard delivers vital non-pay compensation benefits to active-duty members and their families, which comes in various forms, primarily the CGX, MWR, and child development centers.
Palmer punctuated the presentation by showing the transformation as a win-win scenario for the organization because the cost, resources, and overhead required were “net zero.” Given he was already spearheading resilience-related initiatives within the CSC organization, this transformation seemed organic to him and the leadership team.
Building Consensus Up and Down the Organization
Because the CRO role touches every aspect of an organization from operations to information technology to logistics, the person best suited for the role is one who is experienced in partnering with peers and influencing individuals throughout the organization who report elsewhere. Loss prevention is a perfect experience base for someone with those skills.
“Going back to my time at Total Wine, where I started out as a one-man show,” Palmer said, “my success leading a loss prevention function required a lot of negotiation and garnering support. If I wanted all employees to buy into a new program, I needed store operations to sing the same song. Nobody was going to make a move if store operations weren’t on board with what I was presenting.”
He added, “The same was true no matter if you were working with human resources, the buying team, or information technology. Having just one ally at the top isn’t good enough. You have to build consensus throughout the organization, especially below the C-suite level.” Upon taking his role with the Coast Guard, his supervisors were active-duty senior officers, and their primary concern was, “If you left, would someone in the loss prevention industry be able to fill your CRO job?” He answered, “If we build it right, the right practitioner will come.”
Initial Steps in the CRO Role
Like most modern loss prevention professionals, Palmer abandoned the traditional LP methodology of “apprehension statistics equal success” decades earlier. He also believes that while inventory shrink is a tried-and-true statistic, it, too, is an outdated metric for a program’s success.
Palmer explained, “I began looking at total category losses during my time with Total Wine. We kept it simple and called these other loss categories ‘known shrink.’ In the CRO role, I plan to take this a step further with our existing metrics on loss categories to give our business activities a truer picture of their long-term resilience. But, before we look at every expense line as a percentage of sales, to fully understand the impact of spending across our revenue generating business activities, we need to step back and understand why we’re spending. Working closely with stakeholders to accomplish this will certainly change the narrative we present to our board of directors.”
He added, “Further, across our other six directorates led by my peers, we’re going to look at our processes, not just from an improvement standpoint, but asking ‘does this still make sense?’ All too often, we do things a certain way because that’s how we’ve always done it. I believe for us to achieve long-term business resilience, we’re going to have to disrupt our own way of thinking, challenging every status quo.”
Does Palmer expect that everyone in the organization will buy into this approach? “Maybe not, but I will certainly be a champion for them,” he acknowledged. “Experience shows that most folks like to settle back into the way things were done before. I don’t subscribe to that. The past is in our rearview window, and we can’t settle or negotiate on not moving forward. We have a mission at the CSC, and we have to be able to articulate how we’re positively affecting quality-of-life programs for the active-duty member and his or her family. We have to quantify that and move forward together.”
Palmer and his team have been taking a hard look at centralizing the MWR food and beverage activities for some time. He believes with the CRO role, that goal will be accomplished in the next two years. “I’ve been fine-tuning key metrics for the last decade to support initiatives like this,” he explained. “The key takeaway for me is patience, planning, and strategy are necessary in everything I do for the Coast Guard.
“I also plan to leverage new and existing video surveillance systems to assist our CGX, MWR, and CDC operators with compliance issues ranging from out‑of‑stocks, planogram compliance, food sanitation procedures, staffing ratios, and more.”
Regarding his home office and field teams, Palmer plans to blend what he proudly calls his “talented team” with an outsourced model where necessary to ensure they are properly measuring their successes and failures. “I know I’ll make mistakes along the way and that’s okay. We’ll learn from those mistakes, put them behind us, and get back on track. What we learn will mature our ability to be a resilient organization and allow the Coast Guard CSC organization to deliver an outstanding world-class benefit to our Coasties and their families. We’re Semper Paratus!”
Measuring Success
With any significant organizational change, success must be measured to ensure the decision was appropriate and the expected benefits to the organization were achieved. I asked Captain Taylor, the top executive of the CSC, how he would define success, and he outlined four cornerstones:
“Culture—do we walk the talk? There was a comic on the wall at my previous job that read: ‘We changed the name of the department to solve all of the problems.’ This move can’t just be a creative name change, nor can it only be a change that is only understood or embraced by the senior leadership team. It has to be understood and accepted by everyone at CSC, including all sixty-four stores, and the MWR programs we oversee throughout the USCG.
“Leadership—leading empathetically from the front, while staying nimble and agile. Our business resilience team is small but mighty. The directorate’s success hinges on the CSC leadership team’s ability to get this talented group of professionals to accept additional responsibility and, where necessary, expand their professional expertise to best support the organization.
“Change—embracing logical change and focusing on people first. Just as Palmer readily accepted the additional responsibility, his team must adapt and adjust as well. This will be easy for some and will require more effort from others who may be more comfortable with the traditional LP role within the organization. Change management is a function of strong and effective leadership.
“Discipline—relentless focus on execution. As with anything, success can be simply measured by determining whether the goals and objectives are being met. CSC has specific business resilience goals and objectives for which we can evaluate how successful this has been,” Captain Taylor said.
Evolving the Role of LP Professionals
This author has been a long-term observer of the loss prevention industry going back to the early 1990s when I was a solution provider and continuing as a journalist with Loss Prevention Magazine. Early on, it became apparent to me that most loss prevention professionals were very capable, task-oriented problem solvers. Even when the majority of LP employees were tasked with preventing shoplifting and investigating internal theft, a growing number of LP executives realized that their organizations were capable of much more than simply catching thieves.
Over the past 30-plus years, we’ve witnessed the industry’s transition from individuals with mostly law enforcement backgrounds to now a wide variety of retail and business backgrounds. This was partly the result of the retail executive suite seeing the positive impact of their loss prevention organizations and a growing number of forward-looking LP executives who advocated internally for greater responsibility for themselves and their organizations. Jim Palmer is yet another example—not the first by a long shot, and most certainly not the last.
The CRO role may not fit every person or every organization. However, it is an example of the ongoing evolution of loss prevention, which is a profession that has become an integral part of the retail enterprise built upon talented individuals with unlimited potential. All up-and-coming industry professionals who aspire to expand their careers should look inside their organizations for growth opportunities that challenge them beyond their current roles. Both you and your company will be better for it.