More than one in three (36 percent) private companies, many of which were uninsured, experienced an employee theft averaging nearly $350,000 within the past five years, according to research by the Chubb Group of Insurance Companies. And more companies may now face a similar situation as they execute plans for staff reductions and budget cuts — actions which tend to motivate employees to steal funds, equipment and inventory.
“It’s the perfect storm,” said Gregory Bangs, manager of the crime unit at the Chubb Group of Insurance Companies. “Despite corporate America’s emphasis on a more ethical business culture, employee crime continues to drain corporate coffers by an average of six percent each year. Furthermore, many more employees may steal from their employers as a large number of private companies take actions that typically unsettle employees.”
According to the 2005 Chubb Private Company Risk Survey, 31 percent of companies plan to outsource major functions or operations, 21 percent plan to reduce their workforce, and 20 percent plan to reduce or eliminate some employee benefits this year.
“Larger firms may be able to absorb the financial shocks of employee crime, but smaller firms may be faced with financial disaster. Surprisingly, our research shows that more than two-thirds of private companies do not buy crime insurance,” said Bangs. “Regardless of size, strong risk management and ethics programs can help companies reduce the potential for white-collar crime, and insurance can help them recoup some of the losses.”
To help businesses create risk management plans to prevent workplace fraud, Chubb has published a Guide to Preventing Workplace Fraud: Taking Action to Reduce Business Crime Exposure. The 53-page handbook discusses the threat posed by various types of fraud and suggests specific risk management strategies. It can be downloaded at: www.chubb.com/businesses/chubb3331.html.
“The guide is a good starting point for all companies, especially smaller firms that may not have access to this type of expertise,” said Bangs.
Source: Chubb Group of Insurance Companies
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