Physical security incidents cost companies $1 trillion in 2022, according to new report

Large, global companies lost a combined $1 trillion in revenue in 2022 due to physical security incidents, according to a World Security Report, with economic unrest expected to be the greatest security-impacting hazard in the next 12 months.

The report also found that companies anticipate a surge in threats and hazards like social unrest, climate change, fraud and theft.

As a result, physical security budgets are predicted to increase significantly to keep people, property and assets safe. Security leaders intend to focus investments on advanced technology and providing security professionals with additional skills and training.

Fraud – deception intended to result in gain – is likely to be the biggest external threat over the coming year whilst, leaking of sensitive information is predicted to be the biggest internal threat. Dangers posed by hackers, protestors, spies and economic criminals are also expected to soar.

“Organisations are navigating more complex security hazards and threats” 

Commissioned by Allied Universal, a security and facility services provider, and its international business, G4S, the World Security Report is said to have opinions of 1,775 chief security officers (CSO) or those in equivalent positions from 30 countries. Working for large, global companies with a combined annual revenue of more than $20 trillion – a quarter of the world’s gross domestic product, CSO participation was independent and anonymous.

“As the world’s leading security company, we commissioned this report for the benefit of the entire industry and the companies we protect. It comes at a time when organisations across the globe are increasingly navigating more complex security hazards and threats.

“The research shows the impact of security threats on organisations is multidimensional – from the disruption of productivity to the loss of customers, to the potentially staggering financial impact,” said Steve Jones, Allied Universal’s global chairman and CEO.

One in four (25%) companies reported a drop in their corporate value following an external or internal security incident during the last 12 months.

A moving landscape

In addition to CSOs, the report also surveyed 200 global institutional investors to understand the impact of security incidents on the value of publicly traded companies. Investors estimated an average 29% drop in stock price in the wake of a significant internal or external security incident in the last 12 months.

“Global businesses are facing increased security threats; a tight labor market globally; and rapidly changing technology that presents new risks and requires different skills. In addition, executive boards are grappling with balancing physical and cybersecurity alongside other priorities. The World Security Report helps our entire industry and the wider business community better understand and operate in the challenging, global and fast-moving security landscape,” said Ashley Almanza, Executive Chairman of G4S, Allied Universal’s international business.

Key findings from the World Security Report:

• Economic unrest was reported by 47% as the greatest security-impacting hazard in the next 12 months — up from 39% in the previous year.
• Climate change events are on the rise and the second most concerning hazard, with 38% saying they may be impacted in the next year. This was followed by social unrest (35%), disruption to energy supplies (33%) and war or political instability (32%).
• Leaking of sensitive information is expected to be the biggest internal threat in the next 12 months according to 36% of respondents.
• Misuse of company resources or data was the most common internal incident with 35% of companies having experienced this already over the last 12 months.
• Fraud is expected to be the biggest external threat in the next year, predicted by 25% of CSOs.
• Fraud and phishing and social engineering were the most common external security incidents experienced in the last 12 months (23%).
• The threat from two groups, subversives, hackers, protestors, or spies and economic criminals, are likely to soar, with 50% and 49% of respondents predicting they will be impacted by these groups, both up from 39% in the last year.

Security budgets

• Security budgets represented approximately $660 billion (3.3%) of global revenue at respondent companies in 2022.
• Physical security budgets at 46% of respondent companies are set to significantly increase in the next 12 months.
• Artificial intelligence (AI) is top of the agenda for future physical security technology investment, with 42% intending to invest in AI and AI-powered surveillance over the next five years.

The future of security insights

• Cyber threats that threaten physical security systems are challenging to operations according to nine out of 10 respondents.
• CSOs reported a disconnect between physical security incidents and the importance placed on them at board level; nine in 10 CSOs said company leaders are more concerned about cyber than physical security.
• Eight in 10 (84%) said recruitment of security professionals will be challenging over the next five years.
• Nine in 10 (92%) said people skills are more important than physical attributes of strength in front-line security professionals.

For more information, read the report here. 

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