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Staying Ahead of Fraudsters
It’s important to trust your employees, but equally as important to be prepared for the day that one may let you down.
Employee fraud is big business, and getting bigger all the time. Between April and September 2016, 143 frauds took place in Australia, with a total value of $442 million, according to KPMG’s fraud barometer.
The most common perpetrators are ‘business insiders’, with employees and management accounting for more than half of all reported frauds. Some 22% of frauds were facilitated through the use of technology.
Detection is taking too long – 40% of frauds in Australia take place over a five-year period before being discovered – and if you think it’s just the big firms at risk and SMEs are immune, think again!
For many small and mid-sized businesses (SMEs), the vulnerability to fraud can be compounded due to their often informal nature and the fact that fewer staff members can result in less oversight – and a lack of checks and balances. The impact, however, can be devastating with KPMG reporting the average value of each fraud at $3.1 million.
The good news, however – an insurance solution is available to give you peace of mind should the worst happen. Crime cover, an option available as part of many Management Liability Insurance policies reimburses the insured for a loss directly resulting from dishonest acts of their employees. This solution covers direct financial loss, not a consequential one, in other words, the loss should be of money or goods of the insured.
Purchasing Management Liability Insurance is imperative for business owners, however, it is equally important to ensure systems and processes are in place to reduce the likelihood of fraudulent activity occurring in the first instance.
When the future of your business is at stake, it pays to put aside emotions and think practically.
You should always consult your local Adroit risk adviser for advice on the range of policies available to suit you and your business needs.