Wharton Adjunct Professor John Percival teaches in the Wharton/ASIS Security Executive Program. In this Q&A, he discusses why security executives need financial knowledge to lead their departments.

How do you justify a budget request for purchasing new security equipment or hiring new staff? In some companies, security does not get the resources it deserves because executives are not skilled enough at making the financial and strategic case for their priorities. We spoke recently with Wharton Adjunct Professor John Percival, who teaches in the Wharton/ASIS Security Executive Program, about why security executives need financial knowledge and what they need to know.

Why is financial knowledge important to security executives?

These executives are running a service organization within a larger business. They have to compete with other divisions within the organization for resources. How can you show the resources would be best invested in your area? To make your case, you need to be able to speak the language of finance. You may have a good case, but it will not be heard unless you know how to communicate it properly.

How can an executive make a case more effectively for investments in security?

It is important to understand the overall financial objectives of the organization. The company may be seeking to earn a rate of return on total investment that is greater than 12 percent at the same time that it grows at 10 percent per year. It is important to understand that larger story and be able to articulate the role that security is going to play in achieving it.

Security investments are often seen as a necessary expense. How could you make the case that an investment in security could contribute to the company's overall rate of return?

It may not seem like security investments could explicitly earn a 12 percent rate of return, but implicitly they might. For example, these investments in security might make employees feel more secure. Insecure employees could have a higher rate of turnover, and this creates costs for hiring and training new employees. Thus a higher sense of security could reduce turnover, reducing costs, and contributing to returns. Or, if better security can reduce shrinkage in inventories, this can also reduce costs and increase rates of return. It is not always possible to make these arguments-but you should at least be able to think in this way.

What are some of the differences in how finance and accounting executives think about investments?