Doing business in today’s economic environment can create significant amounts of risks. As companies nationwide try to find ways to keep their doors open, they’re downsizing, merging, and consolidating. Notably, these are the types of activities that cause employees to believe they’re justified in committing fraud. Employee fraud is a growing problem that involves such serious scams as asset misappropriations, fraudulent financial statements, bribery, and even corruption.

Currently, it’s estimated that American businesses lose more than $40 billion annually due to employee fraud. Recent studies have found that the most harm comes from the executive suite, not from a disreputable bookkeeper. The study, prepared by the Treadway Commission, found that higher- level executives of the victim’s company caused 83% of fraud that occurred from 1987-1997.

As with most risks, prevention is the best way to reduce losses. Companies must implement internal checks and balances to assure ethical behavior. Companies also should be certain to obtain the proper commercial crime coverage. If you have questions about your crime coverage, don’t hesitate to contact our staff for a coverage review.