No one wants to believe that the staff they work with day in day out cannot be trusted. However, whether it takes the form of skimming, embezzlement, false- invoicing, bribery or corruption, Britain’s businesses are coming under an increasing threat from employee theft and fraud. Here at summ.it we look at how the issue is changing and can offer advice on how to protect your business.
According to figures from the UK’s fraud prevention service CIFAS, staff fraud increased by 40% from 2008 to 2010 with an estimated cost to UK businesses of £45.5 billion.
Whilst many businesses have strong anti-fraud measures in place, factors such as the recession, developments in technology (making fraud easier to commit), and the potential damage to reputations and company profits, means fraud should be high on the risk agenda for every business, large or small.
THE FRAUDULENT ACTS TO LOOK OUT FOR
The most common employee fraud listed by CIFAS was shown to be dishonest action to obtain a benefit by theft or deception. Typically, this could be stealing money from a customer or from an employer via skimming for example, where an employee may divert funds from a customer before recording the transaction in the company’s accounts. Other activities to watch out for include false invoicing where employees might collude with suppliers; overstating or claiming for fictitious expenses; payroll fraud where the employee is paid for work not performed; cheque/bank transfer tampering; bribery and corruption such as bid rigging for example; or simply the theft of stock and physical assets.
REDUCING THE RISK
So what can businesses do about fraud? Strengthening internal controls is an important part of the risk management process to try and stop the fraudulent activity in the first place – consider the following:
• Tighten computer security, with stricter controls over sensitive areas.
• Ensure regular checks of systems and accounts are undertaken.
• Make it policy for all staff to take at least two consecutive weeks’ holiday per year, so that some areas of the business aren’t just accessed and controlled by one person all year.
INSURING THE RISK
In conjunction with the suggested risk management controls above, you can reduce your exposure further by having fidelity guarantee insurance to cover exposures such as theft, employee dishonesty and forgery. Full commercial crime insurance is also available to provide more comprehensive cover for areas such as loss of pension scheme funds and fraud committed by third parties.
Here at summ.it we recognise the importance of protecting your business against the risk of employee and other types of fraudulent behaviour. If you would like any further information on any of the issues mentioned above or would like a confidential, complimentary consultation on any risk and insurance protection matters we can recommend you contact Mark Rogers at a&b Insurance Brokers by emailing email@example.com or telephoning 0844 257 3010.