White collar crime, and embezzlement in particular, is a burden that small and mid-sized companies bear to a disproportionate degree, according to a new study from global insurer Hiscox. In fact, about 82 percent of the companies impacted by embezzlement last year had 150 or fewer employees.
The Hiscox study paints an interesting picture of the people most likely to steal from their employer, and the industries most likely to be affected. Managers are more likely to steal than employees, accounting for 75 percent of cases in the industries studied. What’s more, white collar crimes committed by managers were far more costly, on average, than those committed by employees. The financial services industry reports more cases of embezzlement than any other industry, followed closely by nonprofits, construction and real estate.
What’s probably most disconcerting is that the preponderance of cases are carried out by long-term employees who are trusted by their boss and are good at their jobs. Which, according to the study, is precisely why they are able to steal in the first place. The average case of embezzlement has been going on for about 18 months before it is discovered, usually by accident.
So what can small and mid-size employers do to prevent employee theft and losses? Plenty, as it turns out:
- Implement procedural checks and balances, especially with regard to accounting functions.
- Have bank statements sent to the business owners’ home.
- Ask all employees to sign a code of ethics, regardless of their job function or title.
- Review cancelled checks that come directly from the bank.
- Complete background checks on all employees, and particularly those whose job involves handling money.
Fidelity and crime insurance is an important, but often overlooked, loss prevention measure for small businesses. It protects businesses from burglary, embezzlement and robbery, theft of money, securities or property. Sentinel offers customized insurance solutions to manage the specific risks and exposures that your company faces with regard to white collar crime, including cybersecurity. Give us a call today to speak to one of our client executives.
To download the Hiscox report, click here: http://www.hiscox.com/shared-documents/14537-US-2016-Hiscox-Embezzlement-Study.pdf
To learn more about Crime and Fidelity coverage options for small businesses, visit our partner’s website here: https://www.travelers.com/business-insurance/management-professional-liability/documents/59391%20SS%20Crime.pdf