The subject of employee theft is a distasteful one for most employers to consider; unfortunately, it represents an area of high potential exposure for a business and needs to be addressed through both internal controls and carrying adequate crime insurance coverage. This is particularly the case for smaller and even medium-sized companies who could actually be bankrupted by a large employee theft.
Losses Due to Employee Theft
Relying on 2012 statistics provided by the Association of Fraud Examiners, et al, the amount stolen from companies each year by their employees totaled a whopping $50,000,000,000, and led to bankruptcies in 33% of the cases. This is tragic, since it could have been averted. These losses go far beyond the actual thefts and must include losses to the economy from those businesses that are no longer in operation.
Who Commits the Thefts?
Surprisingly, the bulk of losses incurred was committed by employees that had at least some college education, and in 11% of the cases the thefts were committed by post-graduated educated employees. In 37% of these cases the theft was committed by a manager. These statistics bear out that white collar crime is on the rise.
According to the Association of Fraud Examiners, the median amount stolen amounted to $175,000, and in 25.3% of the cases, the amount exceeded $1,000,000. Alarmingly, the average fraud went on for a period of two years before being discovered. Further disturbing: only 18.8% of these cases were detected by internal audits.
What You Can Do
A licensed insurance agent who specializes in crime insurance can help advise your company on proper internal control procedures and help you obtain adequate insurance to protect your companies valuable assets, keeping you in business even in a worst case scenario.