There are many nonviolent risks in the workplace that can have a devastating impact on a company’s employees, financial stability, liability exposure, brand, and reputation. Embezzlement, in particular, is a silent risk that threatens every organization and can cost hundreds of thousands of dollars in damages. Understanding how to identify embezzlement can help organizations develop effective risk mitigation strategies and avoid costly losses.
A recent survey of chief financial officers, controllers, and accounting managers by specialist insurer Hiscox Inc. found that the average cost of an embezzlement scheme in 2018 was $357,650.
More importantly, over half of the companies that reported being the victim of an embezzlement scheme recovered only 39 percent of their losses through legal settlements and insurance payments — and the losses don’t end there. Seventy-five percent of survey respondents said that the organizations where they work do not have insurance to cover embezzlement.
“Companies that were victims of embezzlement lost far more than money: they lost customers, had more difficulty attracting new customers, and lost business partners,” reported the 2018 Hiscox Embezzlement Survey. “They admitted the embezzlement negatively impacted the company’s reputation.”
Embezzlement schemes often involve more than one individual and can begin with low-level theft. Community-sourced intelligence is critical in these situations — in fact, in 65 percent of embezzlement cases, the fraud was uncovered when another employee noticed that something was amiss. Signs of workplace embezzlement include:
To surface these early warning indicators, organizations should establish formal reporting programs and encourage employees to report potential risks, both violent and nonviolent. The best practice for gathering these community-sourced insights is deploying an anonymous tip-reporting platform that maintains privacy and automatically routes to the appropriate corporate stakeholders, such as legal, HR, safety, and security.
LiveSafe, Vector Solutions’s mobile risk management tool, is the industry-leading tip reporting and incident prevention platform. With features like anonymous tip submission, broadcast messaging, and customizable resources, LiveSafe is equipped to help organizations identify and prevent workplace embezzlement. To learn more about how LiveSafe can help your organization, request a demo.
For more information about community-sourced risk intelligence and its role in incident prevention, read our recent white paper “Community-Sourced Risk Intelligence: Its Role and Value at Work.”