What is the term used to describe lost assets that lead to reduced profits?

The term that describes lost assets leading to reduced profits is known as shrinkage. This concept refers specifically to the loss of inventory or assets due to factors such as theft, damage, or administrative errors. In a business context, shrinkage directly affects a company's bottom line by decreasing profitability without any corresponding increase in sales.

Understanding shrinkage is critical for security and loss prevention professionals, as managing and minimizing these losses is essential in safeguarding a business's profitability. Other terms listed, such as industrial sabotage or espionage, relate to intentional acts aimed at harming a business but are not specifically about the general loss of assets. Asset devaluation refers to a decline in the value of an asset, typically due to market forces, rather than direct losses leading to profit reduction. Thus, focusing on shrinkage provides clear insights into how lost assets impact a business financially.