Employee theft costs U.S. companies with less than 500 people a median loss of $280,000 annually, affecting a wide range of industries, specialist insurer Hiscox found in a new report.
What’s more, most cases of employee theft involve veteran employees, according to the 2015 Hiscox Embezzlement Watchlist.
The study found that smaller companies were among the hardest hit by employee theft, with as many as 80 percent of organizations targeted employing fewer than 100 people. Average total losses in landed at $842,403, Hiscox said.
“Although risk mitigation strategies such as background checks will add a layer of protection, no organization can completely insulate itself form employee theft,” Doug Karpp, national underwriting leader for crime & Fidelity at Hiscox, said in prepared remarks. “Organizations, can, however, take proactive measures to minimize the likelihood of theft and the impact of losses.”
Hiscox recommends that small business owners protect against employee theft by sending bank statements directly to their homes so they can be reviewed, enabling the prevention of falsification. Also, Hiscox said business owners should periodically review payroll reports to look for anomalies. As well, they should either sign all the checks themselves or keep the signature stamp locked up.
To compile its report, Hiscox looked at employee theft cases active in U.S. federal courts in 2014. Among Hiscox’s other employee fraud findings:
- More than 60 percent of employee theft involved women.
- The median age of employees who committed theft was 50
- Employees not in the finance or accounting sections of the company committed over half of the tallied thefts.
- Retail and healthcare companies sustained the largest average losses – at $606,012 and $446,000, respectively.
- 21 percent of employee theft in companies with fewer than 500 employees took place in the financial services industry – banks, credit unions and insurance companies. Financial services organizations in this case dealt with average losses of $271,00.
- Non-profits dealt with average employee theft losses of $202,775.
- Nearly 75 percent of total losses included direct theft of cash or misuse of bank deposits or transfers.