To Catch a Thief

Employers can take heart that property crimes are usually discovered quickly—it’s difficult to conceal the fact that a work site is missing a jackhammer, for instance. Speedy discovery lets a company move to prevent criminals from repeating the crime.

Embezzlement, on the other hand, can be a major blow to a business. Embezzlers are often long-time employees in positions of trust. Because of that trust, they’re often able to commit their crimes over longer periods of time—an average of eighteen months before discovery, says Dick Stackpool, vice president of the Minneapolis-based insurance brokerage Aon Risk Services. And they’re able to steal much more than the average property thief, sometimes even putting a company’s survival in question.

Embezzlement might take the form of expense report fraud; an employee requests reimbursement for expenses that don’t exist or are greatly exaggerated. Others commit vendor fraud, in which they hire a fake company, one in which they have partial ownership, or one that’s willing to give them kickbacks, Stackpool says. They might create a bogus company and bill their employer for work that vendor supposedly provided, then pocket the proceeds. Some employees have even billed their companies for time vendors spent working on their private homes or other personal projects.

These are common tactics, but they’re not the only ones. A dishonest employee might ask each of a company’s two owners to sign a check, sending one to a legitimate vendor and pocketing the other for herself. Embezzlers can duplicate and alter checks, make unauthorized withdrawals, create phony accounts, and otherwise cook the books to their own advantage.

Defending Your Business

Ironically, the first step in protecting your business may be accepting that protections are necessary. “Get past the sense that your corporation doesn’t have these exposures,” Meiners says. “We see a lot of companies that believe that their employees would never steal from them.”

Once you’ve decided to act, realize that there’s no way to guarantee that your business will never be the victim of a crime. Still, you can take steps that reduce the likelihood of a problem. Doing so can reduce your repair and replacement costs, lower your insurance rates, and improve morale. “Look at what types of crime your business is open to,” suggests Gary Salmans, executive vice president of Arthur J. Gallagher Risk Management Services, an insurance brokerage with offices in Minneapolis. Ask your insurance broker for insights into your business’s vulnerabilities and how to protect them.