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The Evolution of Data Sharing in Retail’s Battle Against ORC

Over the past decade, much has changed in loss prevention. As we look back at the transformation that has occurred…even to this magazine…we see a history of evolution in process and technology as well as an evolution in criminal activity.

Ten years ago we didn’t hear much about “organized retail crime.” Now, ORC is a common acronym in the industry as it is increasingly in the popular press. Sure, ten years ago ORC existed, but LP professionals didn’t classify it that way. More often it was discussed as a type of “professional shoplifter.”

However, both then and now, retailers have banded together in a variety of ways to try to prevent these and other losses. Ten years ago retailers would get together in geographic pockets, behind closed doors, and share information via spreadsheets and photos. They created a network of fax machines and call lists to share information and “be on the lookout” for certain persons or types of crime. Over the years we began to put definition to these terms, identify these organized groups, and expand on these regional efforts combining forces as an industry to combat the criminal element.


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The First Steps of Data Sharing

Part of this evolution included the creation of a national database for sharing information on retail crime. The Law Enforcement Retail Partnership Network (LERPnet) is a secure national database for the reporting of retail theft and serious incidents that allows retailers to share information with each other and with law enforcement. The concept of LERPnet was a recent evolution in the process and technology available within the field of loss prevention. The days of closed-door regional meetings and fax alerts had evolved to several broader, industry-wide electronic database initiatives, capitalizing on the technology available to retailers in collecting and sharing information.

Over the past decade the retail associations had each launched and supported separate initiatives. The Retail Industry Leaders Association’s (RILA) InfoShare and the National Retail Federation’s (NRF) REALPIN data-sharing initiatives were ultimately brought together to create one central, national data share called LERPnet. The concept was strong and the need even stronger, but the technology and capabilities of LERPnet struggled to keep up with the advancements in available technology as well as the needs of the retailers.

The associations recognized the concept was still solid, but needed to expand on the technology platform. Working with the FBI, the associations, including the Food Marketing Institute (FMI), banded together to support taking LERPnet in a new direction with a new technology platform designed with features and functionality to support the specific needs of this initiative. The evolution in the underlying technology designed to take this very important initiative to the next level is called LERPnet2.0.


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The Four Ds of Data Sharing

There is a science to the art of data sharing and there are elements required in order to ensure success. These elements are the four Ds of data sharing—direction, definition, data, and diagnostics.

Direction. In order for this type of initiative to be successful, it is imperative that it is driven by representatives in the industry and addresses the specific needs of the industry. It requires the direction of an active advisory board consisting primarily of retailers who represent a proper cross-section of the industry. While consideration for law enforce-ment is also very important…after all this is the “law enforcement” retail partnership network…the needs of the retailers must come first. The role of the advisory board is to provide input on overall functionality of the system, developments, and enhancements needed in the technology, and most importantly, provide direction in the second D, which is definition. The retailers also determine the role of law enforcement and the level of access law enforcement has to the data within the system. Maintaining this control and this hierarchy is critical to successful data share.

Definition. Terms must be properly defined within the database and users must be presented with consistent data. This requires creating defined terms such as “What is organized retail crime?” “What is a robbery?” and, more specifically, “What is an armed robbery?” versus “What is an attempted robbery?” One of the key points of failure in the past data-share initiative was not having the terms well defined. An important differentiator is these term definitions are not mandatory for each retailer to adopt within their organization. Instead, they are to define the terms as they will be represented within the application. This means the terms defined within each business are less relevant than how the group agrees to define terms within LERPnet2.0. To support this differentiation, the technology needs to be able to adjust the data from the retailer to make sure the information submitted into the system is placed in the right buckets in order for subscribers to search and view the data appropriately.

Data. For data to be effective it must first build critical mass. Retailer participation is of the utmost importance. Without the data, there is no sharing. As data comes into the system, it must match its definition and find its proper place in the database. In addition, the data must be broadened to ensure this initiative is not solely dedicated to organized retail crime, but also includes critical incidents like robbery, burglary, arson, vandalism, pharmacy theft, and other events that impact retailers, create loss, and jeopardize the safety of retail employees and customers.

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Diagnostics. It may be cheating here a little with this D, as the word “diagnostics” represents so many other terms, such as analytics, reporting, link-analysis, alerting, and so forth. However, all of these functions tie into the “diagnostic” engine necessary to drive a successful data share. It is not enough to simply have a repository of data that can be searched to find historical results or collective totals. The purpose of the data share is to identify patterns, trends in the data, and to create alerts and notify retailers of suspicious activity or evolving trends in their area of business in order to help them better prepare and better respond to events on or around their property and protect their brand.


Same Name, Different Engine

LERPnet2.0 incorporates the four Ds and provides new structure to this evolution in data sharing. While the brand “LERPnet” has been preserved, the technology behind it has changed completely, and the process to support it has been enhanced to ensure proper representation across the industry segments in the data submitted and in the terms defined. Advancement in this initiative is represented by the changes in technology, in process, and in resources that are all necessary and required for success.

The technology utilized for LERPnet2.0 is based on the data-sharing platform created by ISO Crime Analytics and utilized for a variety of similar such data shares across different industries and across the globe. ISO Crime Analytics also manages several other successful data shares and has launched a variety of such projects, including initiatives for the American Banking Association, known as the “ABA Bank Capture Data Share;” with the Retail Council of Canada’s “RCC LP DataShare;” and other similar projects in the United Kingdom and Europe. Additional data-share projects also exist in the hospitality industry as well as in transportation and supply chain.

Similar to the LERPnet2.0 project, the ABA Bank Capture System most closely mirrors the process and the overall objective of this initiative. The ABA program is driven by an advisory board consisting of the senior vice presidents and directors of security for more than twenty major U.S. banks who, despite being competitors in business, have come together and work together to combat common threats against their industry. The ABA Bank Capture System collects information from the banks regarding robberies and burglaries and ATM crime, and provides advanced analytics for the banks to research criminal activity. In addition a mirror system has been provided to the FBI for access and use by agents and by law enforcement in investigating and resolving bank robberies and other crimes.

With a soft launch announced only months ago and the hard launch pending on June 1, the system already has participation with representation of nearly 40 percent of the U.S. banking industry with nearly 40,000 bank locations represented in the database out of the estimated 100,000 total in the U.S. market. This initiative has already proven successful in several cases and is an excellent representation of the success of the direction, definition, data, and diagnostics required for success. In addition, the inclusion of law enforcement has proven quite valuable in laying a path for LERPnet2.0 to follow the same partnership not only with federal law enforcement, but as it will be made available through for access by state and local law enforcement in the near future.


Process Changes to Ensure Success

The process changes implemented for LERPnet2.0 include the creation of a solid advisory board consisting of twenty-plus retailers as well as one representative from each of the supporting associations—FMI, RILA, and NRF. Law enforcement will also continue to be represented on the advisory board with participation by the FBI and may later expand to include other representatives from key state and local jurisdictions or other agencies.

While the system will launch utilizing the data structure from the original LERPnet system, the first order of business for the advisory board will be to craft the definition in terms required to ensure proper representation of data within LERPnet2.0. This board will be responsible for determining those definitions and for carving the path for success of this initiative.

The final key differentiator for successive LERPnet2.0 is in its resources. ISO Crime Analytics is a unit of Verisk Analytics, a global leader in risk assessment and data analytics. ISO and Verisk share a solid history of successful data-share initiatives in the insurance industry and both have a strong financial foundation. Recognizing the im-portance and significance of this initiative to the retail industry, they have committed the resources to ensure the success of this project. These include development resources to ensure the technology meets not only the initial, but ongoing needs of the advisory board and the subscriber membership.

It also includes the technical resources to provide technical support maintenance and training for use of the system. An online training resource has been created to launch with the system that will provide both initial and ongoing training support to help ensure interaction with the system is smooth and questions are answered quickly.

Finally, a data analyst will be dedicated to the data-share project to provide an additional resource for retailers and law enforcement to help dig into the data and surface patterns, trends, and identify activity and work with retailers directly to assist in developing investigations and getting to resolution.


Key Benefits of the System

The success of LERPnet2.0 is not based solely on the number of organized retail crime investigations that are resolved, but will include a variety of incidents and will offer a number of key benefits to the retail industry. With LERPnet2.0, as with the other data shares created and managed by ISO Crime Analytics, subscriber companies not only leverage the data for industry comparison and analysis, but it provides benefit to their organization through information that supports a variety of needs:

  • The timely and effective reaction to incidents. Reaction may be measured in response by an individual retailer, in collaboration between a group of retailers, and or in cooperation with law enforcement.
  • Proactively prepare for and/or prevent future events. With the advanced intelligence gained from identifying patterns or trends in activity within the system or in receipt of system alerts, retailers may proactively prepare their staffs, allocate resources, or take other necessary action to prepare for criminal activity at their locations.
  • Track incidents regardless of location or jurisdiction. While there are several regional data-sharing initiatives between retailers and law enforcement, crime activity is not limited to these regions. Oftentimes identifying the patterns and trends that are happening nationally lends greater insight into what is happening within a specific area or region. In addition law enforcement often does not have the capacity to identify or otherwise share information across jurisdictions. LERPnet2.0, however, is designed to cross those borders and help facilitate the communication and collaboration necessary to combat these crimes.
  • Benchmark against the industry. LERPnet2.0 provides reporting capabilities to identify trends and activity across the industry and compare those trends against activity within each specific retailer, allowing retailers to identify how they measure up against the activity happening across industry.
  • Enhance your security or LP strategy. With information gained from access to the LERPnet2.0 system, retailers can use the intelligence from within their own business as well as industry intelligence to change or enhance their loss prevention strategy.
  • Better allocate and budget for resources to help prevent loss. Identifying patterns in loss, geographic areas of concern, and the effectiveness of security countermeasures allows retailers to better allocate resources to their locations and to better prepare for and budget capital for additional resources necessary as identified by the information learned from the system.
  • Prepare and train staff to prevent events or with response to incidents. Whether as a reaction to an increase in a particular type of crime within their locations or in the area surrounding their locations, retailers can implement either a reactive or proactive training strategy to better educate and train staff on proper response to an event that has happened or might happen, or as necessary to prevent an event from happening.
  • Prevent injury and loss of life. We certainly don’t like to think of it, and even more so don’t like to talk about it, but oftentimes these types of serious incidents can result in harm to either our employees or our customers. If the shared knowledge of criminal activity increasing in a particular area or if the steps taken to prevent such activity prevent the loss of life or injury, then this initiative is a true success.
  • Protect profitability. While one of the key driving factors that underlies most of these benefits, one of the true goals is to protect profitability of each organization.
  • Reduce overall liability. Another overall benefit that is laced throughout many of the points made here is in the reduction in liability to the retailer gained through this process.
  • Protect the brand image. When it comes down to it, brand protection is the bottom line to all these benefits. Retailers want to ensure no harm comes to the brand image, thereby protecting the liability, profitability, and integrity of the company.


Enhancements in LERPnet2.0

The LERPnet2.0 system will include a number of enhancements and additional features and functionality different from the original LERPnet system. Many features are simply native to the technology provided, but all have been echoed as necessary in order to best support this initiative and make it a success. Among the system capabilities are the following:

  • Easy data entry and import from case management systems. It is imperative that the data-entry process for LERPnet2.0 be as seamless as possible and retailers do not have a double-entry process. The technical team behind LERPnet2.0 will work with existing case management companies and with individual retailers, in order to provide the data specifications necessary to transmit data from existing systems into LERPnet2.0.
  • Comprehensive search tools. With the data is only one place, it isn’t as effective unless there are comprehensive search tools and capabilities to look at the data in a way that the results can be actionable. LERPnet2.0 will include full-text search capabilities on all fields within the system and may have future capabilities for searching attachments where possible.
  • Dynamic link analysis. For searching potentially related records, patterns, and trends in the data and geographically, the link analysis tools provided will assist retailers with identifying relationships within the data between events that are occurring in the industry.
  • Communication and collaboration tools. Central to the success of the data share, these tools allow retailers to work together and to communicate and work with law enforcement.
  • Dynamic report display and geo-spatial mapping capabilities. Essentially absent from the original LERPnet system, reports and maps are at the core of LERPnet2.0 providing a defined user dashboard with access to common reports that also provides drill-down capabilities to properly analyze summary-level details. Mapping will provide geographic view in patterns of activity as well as individual case analysis identifying location of theft as well as nearby fencing, flea market, and other black-market operations where lost merchandise may be recovered.
  • LERPnet alerts and notifications. LERPnet alerts provide information regarding activity reported to the system, details on updates to ongoing investigations, and notification of new or related activity.
  • Online training and support. LERPnet2.0 will be provided with an online training and support facility capable of offering instruction and education on system use and operation for initial training and for ongoing questions.


The Future of Data Sharing

While LERPnet2.0 will move the retail industry data-share initiative for retail theft and loss to the next level, it doesn’t stop there. Just as the criminal element will continue to find new ways to steal from retailers, the future will bring additional technological capabilities and changes in process to continue to adapt to retailers’ needs.

In addition to changes in technology, there are other possible opportunities on the horizon to further enhance the value and the return on investment to the retailers. Specific opportunities include expanding and tracking other types of loss, such as shrink and inventory results as well as safety and accident claims, or to share information across industries.

As an example in the area of safety, retailers often face common threats from individuals attempting to stage accidents or injuries allegedly resulting from retailer negligence. Sharing this information and these fraudulent claims could result in significant savings.

In addition, sharing information across industries could also bring significant benefit. While under the control of ISO, crime analytics patterns have already been identified in relationships between reductions in bank robbery activity in specific geographic regions contrasting to increases in retail robbery activity in the same areas. This type of comparison has never been possible until now. In the past, the data was not available, let alone collected in such a way that it could be viewed collectively across industries.

Imagine the next evolution in data sharing not just among retail loss prevention, but among loss prevention and security across communities where patterns may be analyzed for activity increasing across a variety of segments, including banking, hospitality, retail, and more. Where retailers might not only look at a map of activity of retail theft, but with the click of a button, layer in hospitality and banking crimes, and perhaps even more local criminal activity for a true picture of liability, exposure, and risk.

All of these are well within reach. However, in order to get there, we have to start today to focus, as an industry, on support for LERPnet2.0.

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