Retirement plan sponsors are the first, and most important, line of defense in providing employees with well-managed retirement savings plans.
Fraud & Cyber Security
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2 min read
We live in a world where fraudsters can gain access to treasure troves of data, and even your most trusted employees can engage in dishonest or fraudulent activities that could put your business at risk.
For a business owner, it can be hard to think about your trusted employees engaging in dishonest or fraudulent activities that could harm your company, but the fact of the matter is, it happens more often than you think.
In fact, according to 2018 Global Study on Occupational Fraud and Abuse, businesses essentially forfeit 5% of their annual revenue to employee fraud and abuse, and small businesses are even more susceptible to fraudulent activity from their employees. This study examined 2,690 cases of occupational fraud to provide a representative idea of the impact that occupational fraud has on organizations across the globe.
While the facts and figures can be daunting, and no organization—no matter how diligent—can completely avoid hiring a bad apple or an outside burglar from stealing cash or inventory from your business, your organization can implement the following tactics to help avert incidents of employee fraud and theft.
1. Perform Background Checks
While a background check can’t give you a complete picture of a job candidate’s character, it can help you spot red flags. An employee background check can help your business maintain a safe and secure work environment, helping to protect your assets, other employees, and customers.
Likewise, if your organization works with contractors, consultants, or vendors, make sure that you do your due diligence with those third parties as well. Third parties have even less loyalty to your company, so background checks and effective vendor management practices are critical to help you avoid theft and fraud from infiltrating your business.
2. Minimize On-Site Cash
If your business requires cash to operate, try to keep the amount you have on-hand to a minimum by making regular bank deposits. It’s not wise to keep large amounts of cash on-site, as it gives dishonest employees more opportunity to commit theft. In addition, I highly recommend using cash receipts for cash transactions, and audits and balancing should be done by individuals that are not directly handling those transactions.
Pro tip: Make cash deposits at random times each day. You do not want a would-be robber to see that you routinely leave for the bank with an envelope of cash.
3. Install Security Systems and Cameras
Dishonest employees who may be tempted to commit fraud or theft need to know that you are always watching. Install security cameras and systems around areas where you keep inventory and cash registers, and require keys or security codes for employees to enter restricted areas.
4. Training and Process Implementation
One of the best ways to prevent employee fraud and theft is to ensure your workforce is properly trained on how to handle cash, open and close cash registers, and process payments and inventory. When processes and protocols are in place, not only does it make it harder for dishonest employees to fly under the radar, but it also makes it easier and faster for you and your leadership team to catch discrepancies and potential red flags.
As a business owner, you have a lot of responsibilities to juggle, and it's unfortunate that preventing theft has to be added to the list. But the fact is, U.S. businesses lose billions of dollars each year to employee theft and fraud, so diligence is vital to the overall success and continuity of your organization. With some effort, diligence, and proper risk management, you can protect your business from fraud and theft—from the inside out.
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