I posted this in the security forum, but didn't get much in the way of response - I'll try here then give up. I recently made recommendations that controls over the safe deposit area be improved (you know, little things like not allowing unattended acces to the vault). Management has balked at several, saying they are too costly given the amount of risk that is present. To support, they contacted their bank bond agent, who has told them that insurance claims due to this loss are incredibly rare. I've looked for any information I can find on this, but have been completely unable to locate anything that would even give me a clue as to the frequency of customers claiming a loss of property. Any information or ideas where I could locate such would be greatly appreciated. Thanks.

Wish I had something to tell you. However, we changed our procedures because of the safe deposit box area's proximity to the regular vault. A security audit seemed to be sufficient in our case. If you can't find any hard numbers or facts, you could always alert your management to the security risk to your customers and/or staff in your present procedures. Good luck!

This may not work given your situation with management, but if you could get the backing and okay of someone in executive management you could pull something sneaky.

Could be like leaving a suspicious looking package/briefcase in the Safe Deposit area and seeing how long it takes for someone to notice. Or if you aren't concerned about the possible political ramifications, you could try to locate something owned by management and remove it for a couple days (keeping it in a very safe and documented location in the meantime--and only do this with approval from higher authority). You could even transfer it to a different branch's Safe Deposit area.

It's unfortunately not very kind, but sometimes you have to hit the soft spots in order to get the point accross.

You may be able to find some of this information at the FBI web site, or from the American Bankers Association (they used to publish an annual insurance guide that included bank loss statistics...robbery, fraud and the like). the truth is that management is correct...the risk is low...and may not be worth the allocation of expensive personnel resources to mitigate the risk.....or the potential exposure is so great from a single event that the best means of managin and mitigating the risk is to buy insurance..if that insurance requires the procedure you want to implement....then you might have to do it to secure the coverage. There are, however, automated, attendant-free safe deposit boxes available.......The more ugly truth is that Internal Audit damages its credibility with management by digging its heels in on issues of relatively minor risk.....every loss, or potential loss does not have to be eliminated from a bank's operations. It isn't Internal Audit's job to "demand control at any cost"....just gives them the "police" image that winds up having them excluded from meaningful potential work with the management team. And before anyone dumps on me for not speaking from experience...I was a bank internal auditor and EDP auditor, CPA auditing banks, and a "Chartered" Bank Auditor (now Certified) by BAI. Audit departments for too many years....and me included when I was an auditor...have required banks to control too many risks that they they should have just accepted....Time to really take a hard look at risk "frequency"...how often does a risk event actually occur and result in a loss....and severity of exposure...not what could be lost, but what has actually been lost when that risk event occrred and resulted in a loss....and compare that to the costs of controls....You'll find banks are wasting a lot of money on unnecessary controls...like counting/balancing the ATM every day (not working the deposits...have to do that)...Sorry for jumping on the soap box...but that comment about placing an item in the vault or removing something and seeing how long they take to find it is unethical behavior and demonstrative of the type of auditing that results in marginalization of the profession.

I am not "demanding control at any cost". I agree that the risk of loss is probably relatively low, but that is exactly the information I am seeking. However, any loss could be very large, and in this smaller bank that would have a big impact.

On Bankers Online, there is a seminar advertised for safe deposit box security (Dec. 16th). The instructor, Dave McGuinn, is wonderful. After attending one of his seminars, and seeing all the risk that is involved with safe deposit box security, we were able to convince management that we needed tighter controls.

We had very good response by using the info from the BOL webinar on safe deposit - we audited all locations, wrote up a lengthy audit report and gave them 6 weeks to get internal controls in place to fix the deficiencies or explain what control would mitigate the risk. This report goes to the Audit Committee which is made up of me and all of our outside directors. It was very effective at getting the controls upgraded.

I have a safe deposit box in a branch of one of the largest holding companies.

We pay a reduced rate for not requiring an attendant. A blank of the attendant's key in the box and only our key is subsequently needed. The vault is under video monitoring. So far in 8 years we've had no problem and do not have to wait for an attendant.

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You'll find banks are wasting a lot of money on unnecessary controls...like counting/balancing the ATM every day

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Banks are the only industry I know that prepare a complete financial statement every single operating day. While to the uninitiated many things may seem like a waste of time, there are well established purposes based on established needs behind the requirement.

Knowing that an ATM is not balanced daily is an open invitation for theft. Going a week or a month in an out of balance situation is an unacceptable accounting practice. Once you start loosing controls it becomes an impossible task to maintain any accuracy. I wonder how CPA firms will accept the elimination of these "waste of time" requirements

Its difficult to imagine anyone who has experienced the joy of reconciling an account that has been out of balance for days or weeks or months. advocating things like descriptions on GL tickets are not required (because it takes to long to write one down and considered a waste of time) authorization signatures are missing and the item can't be tracked. Be very careful of anyone who advocates that no, or limited time, be spent reconciling just write it off because its cheaper.

Monthly earnings can be miss stated and a whole host of other problems can arise.

The accuracy of the financial statement and GL accounts are used to determine bank investments, and a host of ratios that determine safety and soundness. Having to restate a statement due to an error resulting from the removal of check and balances can be catastrophic.

I suspect that those that want to eliminate controls have little or no experience in doing day to day bank operations work, or consultants that have little personal knowledge of banking proceses and why they are in place to begin with

Everyone wants efficiency, but you better know what the very big picture is, before anyone starts monkeying with processes that effect the picture.

Yes, you may go for some period of time without a problem, but that doesn't mean every bank will be as fortunate. It should also be considered that even if some controls are removed there is a people factor that will keep some semblance of control. As the experience of the people dwindle the institution can expect higher losses, and a total lack of understanding. Maybe no problem initially, but it will become a very big one.

When I first started in banking over 25 years ago, I was told time and time again that Safe Deposit was on of the riskier areas of the bank. I am now convinced. 2 years ago I represented the bank in court on missing safe deposit contents. Let's just say that without the simple, easy internal controls and procedures being followed we settled for $300,000. plus legal expenses. A very expensive lesson.

Good Luck

Thanks, anon - how did the insurance claim go?

There was none that I know of. It was an out of state branch and then sold just prior to the court settlement. i had been told that it was not inusred at the beginning of the trial. The customer claimed jewels and cash in the contents of the box. Ugly, long story. I will say one thing, several months after he claimed they were missing(his whole liner was missing) a new employee found the entire contents of the box crammed to the lid in an empty slot. Of course he claimed that everthing was there but the cash!