"The more you seek security, the less of it you have."
[Brian Tracey]

Airline security is a fiction. It always was a fiction. It always will be a fiction. It's a fabrication by the government and airline companies who carefully orchestrate a delicate balance between how much inconvenience passengers will tolerate versus the illusion of safety said inconvenience provides. They need you to be inconvenienced as their way of convincing you that they do all they can to assure your safety, while at the same time not so inconvenienced as to be unwilling to fly. They'll take your nail-clippers to ensure you don't use them as a dangerous weapon, but probably not your lighter, since that'd be too big an inconvenience for smokers who'd choose another airline so they can light up on touching down.

An acquaintance of mine recently returned from New York. She'd put a bracelet in her checked luggage. It was a direct flight. It wasn't in her bag at the far end. The airline's response has been to "read the fine print", where they explain they're not responsible for things stolen from your bags, particularly if it falls into certain categories (jewelry, electronics, anything worth stealing, etc). She was told it would likely never be recovered. She was left with the impression they wouldn't be investigating, and that such an investigation would be pointless anyway.

Do they not have a chain of custody with an exact and short list of names of those people with access to the bag? Are the bags not under surveillance at all times? Can they not ensure the integrity of their baggage handlers?

"No" is the answer to all of the above, obviously. In fact, it's such a resounding "no" that they're forced to include disclaimers in the fine print to avoid the gamut of lawsuits that might make it obvious. Someone might follow the logic to its natural conclusion:

If they can make no assurances for what might come out of your bag, how can they make assurances for what might go in?