Business owners and operators in the manufacturing industry have a lot on their mind from day to day. From high-level contracts to new partnership opportunities to taking care of a host of small issues that may arise in the industry itself, something like fraud may not be high on the list of priorities. Fraud detection and prevention is usually put on the backburner as those in key positions may have filled them for an extended period of time, seemingly going under the radar as threats.
In fact, according to the Association of Certified Fraud Examiners (ACFE), organizations lose up to 5% of their total revenue to fraudulent activity. Being aware of potential risks and threats, and having a solid game plan in place to cover losses and protect against future losses, such as investing in manufacturers insurance, are important for those in the manufacturing industry.
Manufacturing Fraud
The manufacturing sector carries a somewhat high risk of fraud. The industry itself makes it susceptible to non-cash frauds such as stealing goods and materials by employees, as well as intellectual property like trade secrets and technology. In early 2018, executives from Waymo, Google’s self-driving technology wing, took Uber, the ride-hailing company developing similar technology, to court over stolen ideas and trade secrets.
As manufacturers have become more automated in their operations, so have the employees and systems controlling them. From inventory management programs to GPS tracking on delivery trucks to corporate charge cards, there are numerous ways that fraud can be assessed to a company without fully noticing.
Preventing Fraud
Detection measures and prevention of fraud in the manufacturing industry can be cost effective. In fact, the ACFE has pointed out that return on investment in such prevention, like manufacturers insurance, includes measures like mining data and analysis on a regular basis, reviewing management, and setting up reporting hotlines.
Results from implementing such measures have showed a significant decrease in fraud and risks. Organizations that used proactive data monitoring techniques saw a 54% decrease in losses and detected frauds in half the time compared to previous timeframes.
While fraud may not be a focal point of organizations in the manufacturing industry, having awareness can go a long way. Investing in manufacturers insurance and taking a more proactive approach to dealing with fraud will most assuredly help stave off threats and cover the costs in the event of a fraudulent activity. Keeping an eye on day-to-day performance and tightening restrictions on internal spending, for instance, will greatly increase the safety of the company, from finances to technology.
About Newman Crane & Associates Insurance
Deciding what coverage you need and what limits and deductibles make the most sense can be tricky. Since 1965, Newman Crane & Associates Insurance has been helping Central Floridians make sense of their options and make the smartest choices for their circumstances. Whether you need Warehouse Insurance or any other type of business or personal coverage, we encourage you to contact our friendly, experienced, and capable team today. Call us at (407) 859-3691 for a consultation.