Reduce Your Chances of Employee Theft With These Tips

Many adventure sports owners assume that their business is too small to be threatened by employee theft, or that all their employees are honest and loyal. Unfortunately, investigations into employee theft clearly indicate that it occurs much more frequently than employers realize. Crime prevention is everyone’s business. By taking a few simple steps to ensure honest work practices, you can substantially reduce your risk.

Commonly Overlooked Theft Exposures

Small businesses can have increased exposures to acts of employee fraud because they often don’t have adequate safeguards in place. For example, an outfitter where a single employee is responsible for accounting is a much easier target than somewhere with an entire accounting team.

Even when employees are a tightly knit team, they are still a considerable risk to your business. Approximately 80 percent of all cases of fraud occur at businesses with fewer than 100 employees, and 50 percent of cases occur at businesses with fewer than 25. The  Association of Certified Fraud Examiners (ACFE ) found that long-term employees are more likely to steal from a business than new hires—making your long-term employees a larger exposure than you might realize. As a result, you can’t rely on background checks or your employees’ work history to protect against theft.

Explore the Unseen: Detect and Prevent Employee Theft

Since the loss during even a single instance of employee theft can be devastating, it’s vital to implement strategies that cover your exposures and deter would-be thieves. Just like you would never let animal steal food from your campsite, mitigation is key. The most effective strategies are based on common theft exposures in order to cover the largest risks. In its survey, the ACFE found the following three common exposures:

1. Lack of internal controls to deter theft

2. Inconsistent internal reviews

3. Possibility for an employee to override existing internal controls

Based on these findings there are a number of simple, effective strategies that you can use to deter thieves, reduce your business’s losses and maintain a positive workplace:

• Employee support programs: When an employee steals from his or her workplace, some of the biggest motivating factors are financial and emotional stress. Formal or informal support programs can help employees identify other resources to rely on during a period of hardship. Especially in today’s economy with inflation impacting all of us, it’s important to remember that all of us are going through difficult times.
• Management review: A simple review of day-to-day activities can help identify exposure areas. For example, regularly ensure that these simple policies are followed:
  • Require two signatures on checks.
  • Review the payroll every quarter.
  • Retain and store accurate records of all sales, inventory checks and financial and bank statements.
• Unannounced audits: A random audit can uncover an instance of employee fraud or inefficient work practices. These audits should not unduly target any employee and should be conducted by at least two individuals.
• Proactive data monitoring and analysis: Many instances of fraud can be caught early if suspicious actions are identified and analyzed. Data monitoring could be as easy as establishing certain red flags—such as a large financial transfer or the unexplained absence of inventory—that would automatically be sent to management for review.

Zero Tolerance Theft Policies

Employees need to be aware of the repercussions of theft. Do not offer warnings or second chances. Your team must know that if caught stealing or committing fraud, their employment will be terminated immediately. Make sure to clearly state your policy in writing and have employees sign their acknowledgment that stealing is not tolerated.

Don’t Face This Risk Alone, See How CBIZ Adventure Sports Insurance Can Help

While you play with danger on a day-to-day basis, don’t let employee theft steal your joy. It can be difficult to know how to react if you find that an employee has stolen from you. However, you don’t have to face employee theft on your own. If you have questions about employee theft or how to prevent this unfortunate and costly occurrence, we’re here to help. Request a free CBIZ Adventure Sport Insurance quote today.

This blog may contain scenarios that are provided as examples only. In an actual claim situation, coverage is subject to the terms, conditions and exclusions of the policy issued. The information provided is general in nature and may be affected by changes in law or the interpretation of such laws. The reader is advised to contact a professional prior to taking any action based upon this information.

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