Losses to business can be staggering
Business owners want to trust their employees, especially those who have been on board for years and have become “part of the family.” The 2015 Hiscox Embezzlement Watchlist revealed that smaller companies suffer the most incidents of employee theft. What’s worse is that veteran employees were involved in most cases. Hiscox’s annual Watchlist examines employee theft cases that were active in U.S. federal courts during the previous calendar year.
Companies with less than 500 employees experienced a median loss of $280,000 from employee theft across a wide spectrum of industries. Approximately 80 percent of those organizations had fewer than 100 workers with losses and averaged losses of $842,403.
Background checks on prospective employees is the first step toward preventing insider theft. Business owners also need to take proactive steps to minimize the risk of embezzlement and losses due to employee theft. Following are simple measures business owners can put in place toward that end:
- Have bank statements mailed to the business owner’s home for review.
- Review payroll reports periodically to look for inconsistencies or irregularities.
- Sign all the checks themselves and/or keep the signature stamp locked up.
Below are other employee fraud-related findings from the report:
- Women were involved in more than 60 percent of employee thefts.
- The median age of employees involved was 50.
- More than half of the reported thefts were committed by employees in departments other than finance and accounting.
- The largest average losses were suffered by retailers ($606,012) and healthcare companies ( $446,000).
- Non-profits sustained an average employee theft loss of $202,775.
- Approximately 75 percent of all employee theft losses resulted from direct theft of cash or misuse of bank deposits/transfers.
Source: “Hiscox Dishes the Details on Small-Company Employee Theft,” carriermanagement.com, 13 May, 2015.