NCPA - National Center for Policy Analysis

Firms Faced with their Own Homeland Security Costs

March 28, 2003

Since September 11, it costs more to run a business. Homeland security has affected businesses the way it has affected government adding unexpected costs for anything from new lock-down systems to shipping delays to lost time for workers due to security compliance procedures.

  • Most U.S. firms spend 2 percent or less of revenue on security.
  • In contrast, businesses in Israel, where terrorism has long been common, spend about 5 percent of revenue on security.

Higher security costs are not simply a question of purchasing more locks and cameras. Those systems must be maintained and kept up-to-date, and companies usually spend one to two times the initial cost of the system on annual maintenance. Other examples include:

  • A typical badge-reading system for a big office building starts at about $250,000. Extra security guards run about $35,000 a year.
  • The Boise Online Shopping Mall, a Web site for Idaho businesses, is spending about $3,000 for new security software.
  • Miami telecommunications company ANEW Broadband has an $800,000 safe room -- surrounded by eight-inch thick walls and equipped with a generator, self-contained air control system and fire sprinklers.
  • Ann Steel, owner of consulting firm Management Options in Marietta, Ga., says she wastes $200 to $400 in business time in airports every trip. She travels about once a week.

Many people, when they think of corporate security costs and systems, envision surveillance systems being installed -- but that is probably just the tip of the iceberg. And since 80 percent of the nation's infrastructure is privately owned, the final costs of homeland security are probably far greater than official estimates.

Source: Michelle Kessler, "Companies Must Add Rising Security Costs to Bottom Line," March 28, 2003, USA Today.

For text

http://www.usatoday.com/money/world/iraq/2003-03-27-homeland_x.htm

 

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