Marsh’s London office has issued a bulletin indicating that it “expects a sharp rise in the number of UK companies buying fraud insurance protection next year, as the world economy continues to deteriorate. Marsh also expects the number of insurance claim notifications relating to fraud to grow in 2009.”
Dean White, a Managing Director in the Financial and Professional Practice, explained: “Historically, when times are hard fraud increases; individuals come under increasing pressure to make ends meet and many businesses are struggling to stay afloat. In such circumstances, unlawful practices which otherwise would have been viewed as unacceptable, such as the manipulation of accounts, false revenue booking, insider fraud and the selling of information to organised crime, may appear a lucrative option.
“Reported fraud cases in the UK were up 15 percent on last year, but this probably masks the true picture. As a result, many of our clients are increasing their levels of fraud insurance protection and expanding their coverage to include computer and data-related fraud.
“Insurance claims notifications will continue to grow through 2009. Financial institutions will likely lead the league table of victims in terms of overall monetary value, but the scale and frequency of corporate, non-financial institution fraud and theft will show the sharpest increase.”
Marsh added that “good risk management is vital in understanding and addressing the threats posed by corporate fraud and may mean the difference between survival and failure for many enterprises. Marsh’s recommended actions for vulnerable companies include:
— Vigilance: look out for increasing levels of employee stress or out of character behavior patterns.
— Controls: ensure segregation of duties in high risk areas, enforce holidays and the handover of work.
— CV check: if hiring new staff take up references and check qualifications.
— Security: ensure that exit procedures are robust and that both physical access to premises and computer access are appropriately limited or removed.
— Staff ‘buy in’: Ensure that a comprehensive whistle-blowing policy is in place; encourage staff to raise concerns about malpractice and create an open working environment.
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