Loss of Fixed Assets
The importance of fixed assets in any company or organization cannot be overestimated. Fixed assets, such as buildings, equipment, or land, are typically the most expensive items that a business or organization owns. They are typically used to help generate revenue, maintain operations and facilitate strategic initiatives. Accordingly, the loss or destruction of these valuable items can cause a devastating economic impact.
Fixed assets are subject to various forms of loss including theft, destruction from fire, flood, earthquake, or other natural disaster, and vandalism. The cost of fixed asset loss depends on its value at the time of the loss, salvage or replacement costs, and the time needed to return it to service. The longer it takes to repair or replace the asset, the more money that is ultimately lost.
Theft of fixed assets is the largest cause of financial loss. Companies can be affected through employee theft or through break-ins. All external doors should be equipped with a quality locking system, as this is often the first line of defense against theft. Establishing procedures that limit access to key areas and high-value items can also help to reduce the risk of theft. Other security measures that may be more effective in reducing theft include alarm systems, surveillance cameras, and on-site personnel dedicated to providing security.
Properly insuring the assets is also important, as the cost of replacement or repair can be substantial. Insurance is critical to the economic survival of a company in the event of a disaster or theft, as it helps to ensure that the losses are minimized.
In the event of destruction from a natural disaster, employee or customer safety should be the primary concern. Once the safety of personnel has been secured and the extent of the destruction assessed, steps must be taken to secure what remains of the fixed assets and to develop a replacement or repair plan.
The cost of fixed asset destruction can be devastating to any organization. While the loss itself can be difficult to prevent in some cases, there are still steps that can be taken to reduce the risk of financial devastation due to theft, destruction, or vandalism. By focusing on prevention strategies and properly insuring the assets, organizations can drastically reduce their potential risk of catastrophic financial loss.
