ROI is up in the air
How do you measure or prove ROI? It's always been among the most difficult questions posed to professionals in the security industry, and it's difficult to answer no matter whether you are a seasoned 20-year CSO, a local manager of a contract guard force, a sales representative for a security integrator, a marketing specialist for some whizz-bang camera technology, or even a loss prevention agent working between the racks. On the surface, it doesn't seem such a difficult thing to prove, right? After all, as George Campbell wrote in the July 2009 issue of Security Technology Executive magazine (subscribe here), "Return on investment is fundamentally a measure of whether some activity is worth doing" (see his article "Showing the ROI of Contract Security Forces").
And ROI can't be a very difficult thing to prove, because we all know whether we are doing something that is worth doing. Every day we answer emails to business associates and clients and we do tasks that we don't even have to question whether they are worth doing. We know they are worth doing. Or at least we think we do.
As a nation, we know we have to screen passengers for bombs and guns, because otherwise some terrorist is going to take down an airliner. And we know instinctively that there is ROI to preventing that because planes are expensive, people's lives are valuable and the continuity of aviation operations is worth billions to the economy. We don't even have to measure that.
But reading a speech by Congressman John J. Duncan Jr., where he addressed Congress about budgeting for the Federal Air Marshal Service, I had to start questioning some of the security expenditures that we as a nation take for granted.
Rep. Duncan, a Republican serving for Tennessee's 2nd district, lambasted the effectiveness of the Federal Air Marshals (FAMs) in June of this year on the floor of the House. Duncan pointed out that the annual budget for the Air Marshal Service is $860 million. There are roughly 4,000 air marshals working the friendly skies, so that means we're spending about $215,000 per year per FAM to keep them flying. I suppose that doesn't seem particularly wasteful, since that figure presumably covers housing when out-of-town, travel to-and-from airports, and a good salary that makes them less susceptive to bribery, plus training, support staff, technology, guns, bullets, handcuffs and whatever else they need.
But here's what outraged Duncan in his speech to Congress (read the speech's full text or watch the video). With 4,000 Air Marshals in service, the service is averaging just 4.2 arrests per year since 2001. It's certainly not a very high arrest number, but what Duncan adds is that "In fact, more air marshals have been arrested than the number of people arrested by air marshals." And when you measure that arrest number by the average budget, Duncan points out that it costs $200 million per arrest. One of those arrests was the Qatari diplomat who joked after smoking a cigarette in an airplane lavatory that he had trouble lighting his shoes afire. So, at least one of the 4.2 arrests per year really wasn't even due to a threat. His shoes weren't explosive, even if his bad humor was.
Now whether you're a fan of what the Air Marshal Service does (the director of "Please Remove Your Shoes" certainly wasn't, as our reviewer recently noted) or whether you think, like Duncan, that the nation should yank their budget and use it for something actually effective, you have to admit that the core issue here is return on investment -- good old ROI. I suspect that when and if Congress really tries to kill the FAM program, the Air Marshal Service is going to make the typical claims of ROI that are based on "proving the negative", as Campbell calls it. Proving the negative, said Campbell, is about saying that a security program must be working because we don't have much theft, we don't have many arrests, we don't have many break-ins, etc. You hear it also from the technology channel when they say, "Cameras are effective because they deter crime."
But while proving the negative is the common way that security managers and technology sales persons operate, it doesn't always float, and it certainly didn't float for George Campbell. If you want to know how to present ROI and security, read Campbell's article and then go out and buy his book "Measures and Metrics in Corporate Security." He teaches how to prove the positive of a security program, rather than speculate on perceived ROI from negatives.
In the meantime, we're going to wait to see if there's any response from the TSA Federal Air Marshals Service. It's already been one month and I haven't seen anything from the FAM program defending its effectiveness. Maybe they're reading Campbell's book and reviewing their ROI.
In other news:
PSA's new education program, TSA argues with GAO, Oil rigs and terrorists
Some chemical facilities aren't meeting those CFATS deadlines. … PSA is launching a new educational program. … The TSA is refuting the GAO claims that TSA needs a contingency plan because it isn't even close to being ready for August's deadline to implement 100% commercial air cargo screening. … Virginia Senator Jim Webb is calling for protection of oil rigs from terrorists. … EasyLobby reported strong earnings in the first two quarters of 2010. … Law enforcement crackdowns are linked to a drop in alarm system scams in Texas.