Behavioral Monitoring: A New Paradigm For Exception-Based Reporting

In the past 10 years, exception-based reporting (EBR) has become a widespread tool for loss prevention in retail organizations. EBR has allowed retailers to easily identify instances of potentially fraudulent activity by using data from point-of-sale systems. They no longer have to search through cumbersome sales records to spot patterns of dishonesty.

However, most organizations are not taking advantage of the capabilities of their EBR solutions to change the behavior of sales associates. By enforcing policies regarding sales activity, improving employee training and identifying unwanted behaviors, sales executives can take action to encourage the desired behaviors and curb losses. This white paper explains why shifting to a so called "behavioral monitoring approach to EBR allows retailers to reduce the opportunities for fraud.

EBR is a key tool for identifying habitual patterns of dishonest behavior in a retail organization. It provides a central data point for all of the information relating to point-of-sale transactions in the organization. EBR systems have become commonplace in the past 10 years or so, with manufacturers of cash registers and other key retail technologies making it easier for managers to access this point-of-sale data.

An EBR system allows users to set "thresholds" that will identify anomalies in retail behavior – for instance, an abundance of refunds or voids at a particular register, or by a particular sales associate. Managers who simply read the point-of-sale data cannot find such anomalies – they do not stand out in such a sea of raw data.