Embezzlement occurs when employees or trusted business parties steal from the company. Typically, an employee (or someone connected to the business) may use company cash improperly to make a profit. Sometimes, even if you take care to only hire the brightest people, not everything will go as planned. Let's examine some strategies for defending your business from fraud.
The majority of embezzlement cases occur in the financial, insurance, and manufacturing sectors, and the average damage is around $175,000. Even with such high stakes, a significant portion of embezzlement cases goes unreported. Moreover, most first-time offenders aren't detected by background checks.
Some common back-office embezzlement schemes include:
Unlike common larceny or burglary, embezzlement necessitates membership in an organization and a position of relative trust. Sometimes the absence of supervision might give one the impression that they are invulnerable, which makes them more eager to take risks.
Many embezzlers persuade themselves that the firm owes them something as a result of their years of dedication and devotion, or they make a commitment to themselves that the embezzlement will only be a short-term solution to their difficulties and that they would return the money before it is lost. Further, they often occur after an employee has held a senior position within a company for a while.
It is always advised to do routine internal reviews of the business's finances. Random audits or yearly book audits by a third party demonstrate to staff that you are serious about preventing fraud and discouraging would-be criminals. Additionally, verify for any missing documentation and confirm that all payment amounts correspond to all invoices.
Never skimp on cyber security. The most recent firewall and antivirus programs should be installed on every device. Be wary of "phishing" attempts that aim to steal sensitive data from you or your staff. These typically come in the form of an email that seems to be from a bank or other service provider but is actually fraudulent.
Your checks, credit card data, and mail are all targets for theft by employees and others. Printed bank accounts and other delicate documents ought to be destroyed or kept in a safe place. Keep in mind that most financial institutions now allow you to completely opt-out of receiving print statements.
Taking measures to ensure your employees are the best and to prevent any criminal activity is essential for a company. Despite this, no system is foolproof. A crime and fidelity insurance policy, on the other hand, can assist you in recovering from embezzlement. The types of coverage offered by this type of insurance include:
The procedure for filing a claim with crime and fidelity insurance is rather straightforward. First, the insured business must take swift disciplinary action against the employee and immediately notify the insurance provider of the claim incident (based on the situation). The claim will be refused or authorized based on a forensic audit, provided that the insured company provides the necessary evidence.
Make sure your business is capable of recovering if a trusted employee steals from you. To explore your business's needs for crime and fidelity insurance, contact professionals at Kneller Insurance Agency. Our team of experienced and expert insurance agents can help create a customized coverage plan to meet your business needs.