Loss Prevention in Brazil: A Brief Overview

As an industry, loss prevention is still a relatively new concept in Brazil.

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Editor’s Note: Ever wonder how loss prevention is managed in other countries around the globe? In this post, we have a perspective on the loss prevention profession from the South American country of Brazil presented by Fernando Guinzani, who has more than 17 years experience in loss prevention. Graduating with a degree in fraud risk management and compliance from the Foundation Institute of Administration, Guinzani currently serves as country loss prevention manager at C&C Home and Bulding, and is also director at IBEVAR (The Brazilian Institute of Retail Executives) as part of the Loss Prevention Committee.

In the last decade, the Brazilian retail market has assumed a leading role in the Brazilian economy. In a study conducted by IBEVAR (Brazilian Institute of Retail Executives) in October 2018, the sector projected growth of 3.55 percent compared to 2017. However, when looking at loss prevention, we noticed that these trends are not advancing at the same speed.

In Brazil, the first studies on loss prevention began in 1998, through the PROVAR (Retail Administration Program), an entity linked to the FIA (Foundation Institute of Administration), with the contribution of retailers for the maintenance of the project. Large corporations, similar to the movement in the United States, adopted the nomenclature “loss prevention” for sectors then responsible for process control and security. For example, the Carrefour Group, currently the country’s largest retailer, referred to loss prevention as “fiscalização e controle” (Supervision & Control) until 2001 and was integrally focused on asset security.

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Despite the lack of bibliography produced in the country, some Brazilian authors have established lines of reasoning that already allow national retailers to target the best practices for the implementation of a solid loss prevention movement. In his book “Pentagon of Losses”, Anderson Osawa, loss prevention director at Cinemark and director of the loss prevention committee of IBEVAR, describes how an efficient loss prevention area should be supported by five elements:

People are the backbone of any company’s loss prevention planning strategy, to include motivation, involvement, environment, and engagement. According to the author, “People management strategies are among the most evolved in the last decades for application across all business segments.”

Processes determine how the company will implement the program, taking into account risk points and their impacts and controls. In loss prevention, there are two phases of process components:

  • Knowing the business, to include the evaluation of organizational chart, responsibilities, interviews for survey, macro flows and key processes.
  • Design and Implementation, to include process design, identification of risks, causes and origins, action plans and norms and procedures.

Operational Auditing is the responsibility of Loss Prevention in the retail environment and includes the monitoring and measurement of the application of processes The audit is an activity that can only be executed if people and processes are in place, since there is no audit without formalized processes and, neither, without previously trained persons.

Loss Prevention Technologies help mitigate the risks of fraud or deviations by setting up an environment that naturally reverses the burden of action for the possible fraudster. In loss prevention planning there are important support tools in strategic pursuit by building the best financial loss results to include CFTV (In Brazil the CCTV system is called Circuito Fechado de Televisão), electronic article surveillance (EAS) systems, and intrusion alarms

Key Performance Indicators. Vicente Falconi, a Brazilian author, project specialist, and Ph.D., states that failures to achieve good results occur because:

  • Wrong goals or definitions of wrong problems are established
  • Action plans are performed in the wrong way, either due to lack of knowledge of the methods of analysis or due to a lack of technical knowledge or necessary information.
  • Incorrect execution of the action plan after the established deadline or due to circumstances beyond our control.

A financial metric creates the possibility of translating all other objectives into a single unit of measure, which makes it possible to compare them and identify priorities more clearly. The principle of loss prevention work is to find out the number that represents the losses in its result. For example, the physical inventory process and identifying the value of their inventory loss.

With regards to the development of the loss prevention sector in Brazil, there is still much that needs to be done. The first Association of Loss Prevention Professionals (ABRAPPE) just launched in September 2018. Forums and events remain an area of opportunity, but industry professionals believe it is be possible to build a strong and independent loss prevention presence within the Brazilian retail industry. Time will tell.

This post was originally published May 8, 2019 and updated May 24, 2019.

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