Senior Manager, co-founder, Chairman and CEO
Forecasting crime to save money
CAP Index, Inc. uses analytics to help companies choose the right amount of security
If you’re a CAP Index client, you don’t have to guess how much security you need.
Whether opening a store in a new location, deciding how many security guards a hospital lobby needs, or determining if a perimeter fence is necessary around an office complex, CAP Index provides data-driven answers that save money – and help executives sleep better at night.
Like with everything today, security budgets are scrutinized. Our data helps companies make objective decisions on where and how to spend. And SAS gives us the flexibility to support the models that help us do that.
The company, based in Exton, Pennsylvania, uses demographic and crime data from across the US, Canada and UK to deliver objective information that helps its customers save millions in unnecessary security costs, and avoid potentially significant losses to property and person. CAP Index also helps avoid locations that are costlier – and riskier – than clients thought.
CAP Index’s data analytics work for business associations allows companies to see where they stand compared to others in their industries. One CAP Index client used these forecasts to shave $20 million off its security budget with no adverse outcomes.
“We don’t have a vested interest in saying that an area is ‘high crime’ – we’re not selling cameras or security measures,” explains Steven Aurand, co-founder, Chairman and CEO. “We provide risk-level information by location so businesses can choose appropriate security. When companies don’t overspend on security where it isn’t needed, they can spend their resources in areas that truly need more security.”
Since the company’s founding 27 years ago, CAP Index has used SAS® Analytics to model its risk forecasts. The company uses a desktop version of SAS that can handle data from multiple sources and support quick and efficient model building.
Replacing subjectivity in security
CAP Index developed a forecasting methodology more than two decades ago in response to legislation proposing stringent, across-the-board security measures for certain businesses.
At the time, Aurand was a researcher-statistician working at the Criminology Center at the University of Pennsylvania. Criminology Professor Robert M. Figlio suggested to Aurand that there had to be a more rational, cost-effective means of determining the likelihood of crime occurring at specific locations. The success of the early research led Aurand and Figlio to found CAP Index.
“Prior to our approach, businesses often relied upon subjective ways of ranking existing and proposed locations,” explains Aurand. “We look at multiple factors to model the degree of social disorganization surrounding a location and how that impacts the risk of crime and loss.” The forecasts assign any given address a score between zero and 2,000. A score of 100 reflects an area that statistically matches the US average for crime. A score of 400 would suggest an address will have crime risk four times the US average.
The company’s forecasts and maps are used by 81 of the Fortune 100 companies in a variety of ways, like helping:
- Delivery companies understand whether they need a signature for a delivered package.
- Credit card providers understand and thwart fraud.
- Retailers understand the likelihood that criminal fraud rings are targeting their stores with ploys like returned-item frauds.
- Insurance companies determine whether to enforce stricter underwriting standards in certain geographic areas.
In addition, CAP Index aggregates and analyzes security measure and loss information provided by members of groups like the American Bankers Association and the Food Marketing Institute so that participants can benchmark their security-measure usage against their industry peers in terms of neighborhood crime risk.
Increased awareness of the value of data
Aurand says companies are much more accepting of the data-driven approach than they were 20-plus years ago. “There is so much more information that we can use, and we have better tools to analyze the information and present it in a friendly fashion,” he adds.
But while companies are more open to an approach predicated on data and analytics, they often are surprised. Aurand explains that people start any discussion of crime with perceptions based on where they grew up and currently live. “If they come from a relatively safe area, or if their experience is in a relatively safe area, they may think that a certain location is a war zone, when it's really not that dangerous relative to the national average,” he says. “On the flip side, people from urban areas will often have more crime tolerance and not perceive an area to be bad. People are surprised by our findings all the time.”
The data-driven approach is particularly valuable when CAP Index customers enter a new geographic area. The forecast maps go three to six miles out from a proposed address, and clients are sometimes startled to learn that while the immediate area they are looking at is low-crime, the extended area has higher risks.
“Like with everything today, security budgets are scrutinized. Our data helps companies make objective decisions on where and how to spend,” Aurand says. “And SAS gives us the flexibility to support the models that help us do that.”
Create models that forecast crime risk to help companies understand the level of security they need at their locations.
CAP Index has helped 81 of the Fortune 100 companies save millions in unnecessary security expenses.