Companies must always have steps ready to prevent fraud in their business and avoid disaster. They face a growing number of threats, but one of the extreme concerns is the increase in fraud. Small businesses have the highest rates concerning fraud frequency, with an average of 32% of companies dealing with corruption.
Prevent Fraud: The Methods to Accomplish This
However, larger organizations are just as exposed to fraud from without and within, with businesses around the nation losing around 5% of their yearly gross revenue to fraud.
Preventing Fraud
Commercial crime insurance is financial peace of mind should your business become the target of fraudulent activity, but this isn’t the only protection you should have in place. There are several elements to a robust risk management approach that mitigates the threat of employee fraud.
Be Aware of Your Employees
Several characteristics can send red flags about an employee’s intentions, and by carefully listening to your employees and observing their behaviors, you can potentially identify a fraud risk. Look for signs like an attitude change, where the employee feels undervalued, or where years of loyalty and devoted effort have given way to a lot of missed work. It takes a personal relationship with each employee to help you better understand where the risk may come from, and it’s through subtle cues like financial difficulties, low morale, or resentment.
Develop a Reporting System
The entire organization should understand the fraud risks and know your company’s policy concerning consequences. Awareness can be a strong deterrent, but everyone needs to share accountability. Employee dishonesty is typically one of the types of commercial crime coverage. Still, you help reduce the likelihood of a claim with an anonymous reporting system, clear violation policy, and continuous training on recognizing the threat.
Have a System With Internal Controls
You can mitigate your losses to fraud by taking away the opportunity for dishonest employees to act. Setting up internal controls will safeguard the company’s assets, deter theft and fraud and help preserve the integrity of your company’s records and reputation. Thorough documentation and daily reconciling of accounts, receipt books, invoices, and other financial paperwork, as well as segregation of duties, will help deter dishonesty.
The more avenues you can master in controlling an issue, the more you can reduce claims for losses valued under a commercial crime policy.
Work With Trustworthy Experts
While it seems efficient to outsource specific processes to experts, hiring experts could also open your business up to new risks. When you hire accountants, tax experts, or other professional services, get several recommendations and research the company thoroughly. You need confidence in the expert’s reputation and trustworthiness to provide security for your information and accuracy in any financial dealings.
Although you may have commercial crime coverage, you can help your business by reducing the risk of employee fraud. These four tips give you a place to start.
About The Hilb Group
Deciding what coverage you need and what limits and deductibles make the most sense can be tricky. Founded in 2009, the Hilb Group has been helping clients to 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