How firms cope with crime and violence

The costs of crime and violence to the private sector amount to significant losses in terms of gross domestic product (GDP). The private sector's response to crime and violence varies by country, size of firm, and sector, among other factors. From a financial perspective, high crime rates can lead to increased business costs, such as a shift of scarce working capital from productive uses to security solutions; losses resulting from theft, contraband, fraud, and corruption; and higher insurance costs. Some governments are increasingly concerned with the social and economic effects of high rates of crime and violence. Although the issue of crime and violence has been examined thoroughly from a number of perspectives, little systematic work has been done to understand how private businesses cope and try to preserve their competitiveness. This report documents a wide spectrum of coping strategies, from exit to survival, from acting alone to collective security mechanisms, and from operational strategies to predatory strategies. Such an analysis of business coping strategies is an important input into how the private sector, governments, and the World Bank Group can help the business sector to survive and even grow in environments with high rates of crime and violence.