Is it time for a different approach to asset security?
24 May 2021
There is no shortage of security companies working in the insolvency sector today. Faced with such a wide choice of providers, it is tempting to go with the most cost efficient, the most well-known or the one you have used before. But does this drive the best value, or the best outcome? We take a look at three key areas you should consider.
Choose a provider who will own your problem
Procuring security services for distressed property is often viewed as a cost play. While this may be true to a certain extent when it comes to physical security, there are many other areas where a proactive approach can really add value.
Damien Frost, director at MEN-SEC, highlights how effective security companies will own problems after just one call. ‘Security providers should take on the responsibility and ownership of meeting your broker’s insurance requirements, with a focus on proactively mitigating your exposure to risk. If an inspection highlights fly-tipping on site, your security provider should issue an inspection report highlighting the problem. You need someone who will go that step further. We proactively call the client with an outline proposal for removal, detailing costs and timescale. The issue is resolved there and then.’
This proactive approach, coupled with industry expertise, can remove major headaches for IPs and receivers. Damien continues ‘We were tasked to clear and secure the HQ and yard of a very large construction company in the North West that had entered administration. This was a complex compliance project due to the sheer volume of combustible and hazardous material to be cleared. To add intricacy, the client was well past the compliance deadline for insurance. We proactively reached out to the broker to extend the open cover insurance facility. We made sure the insurer and the IP were fully engaged in dialogue over the extensive clearance, giving them confidence that this was being expertly managed. As a result, we acquired two 30-day extensions for the client, keeping them compliant at all times.’
Genuine expertise in the insolvency sector
Having a presence in the insolvency sector doesn’t necessarily mean a company has expertise. For instance, the requirement for securing assets as part of an LPA or fixed charge receivership is fundamentally different to providing ongoing security for building sites or maintaining vacant social housing.
Damien explains why insolvency expertise makes a big difference. ‘The risk profile for each recovered asset is unique, and the timescales involved are often critical; your security provider needs to understand the implications of this and be able to accommodate changes to the risk profile as you move through the recovery process. It’s beneficial to work with your security provider pre-appointment to get an understanding of holding costs, as this helps avoid unforeseen expenses later. You could need a security provider to work with you through an IBR and provide tangible holding costs. If your security company can’t or won’t provide these, they probably don’t have a robust understanding of the recovery process.’
A site survey with recommendations aligned with the insurer’s compliance standards can give a good indication of a security company’s insolvency expertise. A security provider with the vast majority of their business protecting long-term vacant pubs, or supplying guards, will make a recommendation based on their experience and typically ignore any security already on site. This does not deliver best value.
Focused on driving the right outcome for you
This may sound like a strange thing to focus on, but many national temporary security companies are owned by private equity firms or investment funds. This drives a sales-led operating model, focused on optimising value for the owners and creating frictionless, repeatable processes to drive efficiencies.
Conversely, MEN-SEC is owner-operated and doesn’t have a sales team. Damien explains ‘When developing this business, we wanted organic growth by having a great reputation as a specialist in the insolvency arena. We didn’t want to dilute this vision by recruiting a “business development” team with aggressive sales targets – that focuses on short-term, top-line growth, rather than delivering the right outcome for the client. We work hard to maintain a reputation for excellence; our primary focus is to provide expert advice for clients. That may mean telling a client they don’t need extra security to be compliant or risk-free, but in my view deploying unnecessary security measures just to get extra revenue is unethical.’
Inter-departmental collaboration within a security provider also plays a significant role in the effectiveness of service delivery. Often requirements identified in the ‘sale’ aren’t clearly communicated to operational teams who deliver the services on site, and the administration functions have no understanding of the site layout. This means things can get lost in multiple layers of internal communication. Damien summarises ‘Effective security providers ensure that everyone involved understands the clients’ objectives for each property, across front-line operations and back-office functions. This holistic view means the right client outcome is always delivered.’
Damien Frost has over 15 years’ experience in the insolvency sector, working for IPs and receivers throughout their supply chains. Together with his business partners, he has built the MEN-SEC Group to specifically focus on delivering specialist security solutions to the insolvency industry.