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October 31, 2006
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 |
