Study: Insurance Spending Outpaces Security

Study: Insurance Spending Outpaces Security

NU Online News Service, July 10, 4:31 p.m. EDT?The amount of money corporations are spending for security measures has not budged much even after 9/11 terror attacks, but the spending on insurance, on the other hand, has soared, according to a new study.

The report issued by the Conference Board, a nonprofit, business-research organization in New York, said the median increase in security spending has been four percent since Sept. 2001.

But the study also found "soaring increases" in corporate spending for insurance and risk management. It reported that median spending for these two business essentials are up 33 percent. About 20 percent of the companies said their insurance costs have at least doubled since 2001.

The study was based on a cross-country survey of some 330 business security directors, risk managers and information technology security officers, the Conference Board added.

Commenting on the study results, Tom Cavanagh, the main author of the Conference Board's report, said that, "Business leaders are reluctant to spend more on security when they don't see it contributing directly to their bottom lines."

Mr. Cavanagh noted that many security experts anticipated a widespread move by corporations to centralize security operations in the wake of 9/11. But the study found that most companies have not changed the way they manage security.

Only 24 percent of them, Mr. Cavanagh said, have centralized security responsibility in a chief security officer and not too many businesses are interested in creating this relatively new position. Most companies employ less than 50 people to oversee all their security needs, he added, though many use outside security consultants and guard forces to support their staffs.