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Protecting Properties


A financial institution has total responsibility for everything pertaining to the properties it owns. So it needs a clear strategy outlining all the steps that must be followed to protect that asset.


“How to secure the property is not always as obvious as it seems. There’s a tendency sometimes for people to just cut the power off and lock the doors.”


Christopher Taylor, Zurich


Now that the repossessed collateral is on the lender’s balance sheet, the lender is responsible for securing the property and preserving the home from damage. By establishing a checklist of common- sense procedures, the bank can mitigate the risk of damage due to obvious perils like fire, theft, vandalism, water damage and mold, as well as more extreme risks like environmental contamination. In the case of commercial properties, there’s a great risk now of thieves stripping commercial buildings of copper wiring. A loss prevention strategy must begin with communication between those doing the repossession and those doing the financial work, so that as soon as the property falls under the bank’s custody, efforts to protect it can begin. This should include regular physical inspections, communication with law enforcement authorities and utilities, and a plan for regular maintenance. Without maintenance, the property becomes a vandalism target and diminishes further in value, increasing the damage to the bank’s balance sheet.


Copyright © 2012 by A.M. Best Company, Inc. All rights reserved. No part of this report may be reproduced, stored in a retrieval system or transmitted in any form or by any means; electronic, mechanical, photocopying, recording or otherwise.


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