Managing Insurance Risks

5. Theft and Fraud

Many kinds of theft can be prevented by securing your premises. Other threats come from within your organisation and can easily be overlooked.

5.1 Favourite targets for thieves include cash, spirits, clothing, electrical products, cigarettes and computer equipment.

• Indelibly mark all equipment with the company name.
• Some equipment, including computers, can be cabled to desks or bolted down. Your insurance policy may insist on this precaution.

5.2 Theft by employees can add up to large amounts of money.

• Vet all new employees, and especially those who handle money or have access to computer systems. A simple honesty check is to find out whether new employees actually have all the qualifications they claim to have.
• Petty theft is a common problem. Allow only named individuals to order equipment or stationery.

5.3 Collaboration with other organisations can help prevent theft.

• Trade associations and retailer groups often share information on recent thefts. For example, a shop can alert others in its area to gangs of shoplifters.
• Police crime prevention officers can alert you to particular risks facing your business.

5.4 The symptoms of fraud can be undetected until it is too late.

• Set up systems to double-check all invoices and expenses. Employees may submit false expenses claims, inflate invoices from suppliers, or set up fictitious supplier accounts.

5.5 Theft of intellectual property can be even more damaging than fraud.

At times, it is impossible to detect. A competitor may get hold of the information without you even knowing.

• Patenting ideas may be too costly for smaller firms, so taking preventative measures is often the best option.
• Restrict access to sensitive information by encrypting computer files. Keep passwords secret and change them regularly.
• Consider taking out legal expenses insurance to help fund any legal battles to defend your rights.
• Consider imposing express confidentiality obligations in contracts of employment.