Protect Your Business from Occupational Fraud
You may feel that your employees would never steal from you or that your business would never be the victim of theft, but the harsh reality is that nearly every business is eventually victimized by fraud or theft. In this day and age, thieves (including your employees) do not need direct access to cash to steal from you; merchandise, supplies and securities are all fair game. You may also be susceptible to losses if finished products or even raw materials are stolen right from under your nose. Essentially, any product can be a target for thieves if there is an opportunity to make a resale profit.
According to research done by the Certified Fraud Examiners, every year, companies all over the globe lose 5 per cent of their revenue because of occupational fraud. That equals about $3.8 trillion in losses.
To put that into perspective, let’s say you racked up $1 trillion of debt. You’ve worked out an agreement to pay off your debt by giving back $1 every second. How long would it take you to get your debt down to zero? Thirty-two thousand years.
There are things you can do to protect your business from occupational fraud. Here are a few of them:
- Become aware of behaviours that would be considered “red flags.”
- Train supervisors on recognizing potential red flags and on how to react when they discover them. Employees should be aware that they can report any incidents they see.
- Focus your efforts more on preventing occupational fraud rather than recovering from it. Although it may be tempting to take a backseat in trying to prevent these incidents, it will cost you much more to recover from the occupational fraud.
- Purchase crime insurance.
No matter the size of your company, employee theft remains a very real possibility, which is why it’s important to take steps to insure your business against losses stemming from an incident. While standard property and inland marine insurance policies provide some protection from criminal acts, they often do not cover losses resulting from employee dishonesty. Crime insurance was developed to deal with the limitations of other policies and extend protection to include the fraudulent activities of employees.
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