According to the PWC 2018 Global Economic Crime Survey, 49% of organisations globally claim that they have been a victim of fraud and economic crime, writes Leslie Dick, Management Risks Client Director at Willis Insurance and Risk Management.
The term ‘crime’ encompasses many types of activity, such as; bribery, insider trading, fraud, labour racketeering, embezzlement, copyright infringement, money laundering, identity theft, forgery and cybercrime.
With the rise of digital, cybercrime has increased in volume, frequency and sophistication. According to PWC’s survey, 31% of its respondents that suffered fraud indicated that they experienced some form of cybercrime. Previously an issue reserved for firms that transacted online, but now an area of vulnerability for any firm that uses computers, sends emails, has a website or uses online banking.
The reality is that all organisations – whether operating online or trading through a bricks-and-mortar store and whether there are 10 employees or 200 – must be aware of the threat of crime and fraud that can emerge at any level of business, within any industry.
Businesses should also be aware of the so-called ‘threat from within’ – its own employees. It is not uncommon for an organisation to become a victim of theft at the hands of one of its own staff members. Signs or behaviours that often represent common business thefts can include such things as; paying bills to companies that do not exist, padding payroll and cash expenditures and stealing merchandise and material.
The losses experienced by a business in the event of crime is not only a loss of profits, but can also cause damage to its reputation, brand and business relationships. From the outset, a robust system of internal controls is required as a preventative measure to mitigate the risk of crime and fraud. However, if the worst should happen, a comprehensive crime policy can provide essential protection.
Modern policy wordings offer insurance cover that protects companies from theft, employee and third-party frauds. Theft policies generally protect against loss of money and securities by way of theft, disappearance or destruction while the property is on your business and/or banking premises, with cover normally restricted to theft by violent or forcible entry or exit from the premises.
Crime cover is an extremely suitable alternative and readily available often at a very competitive premium. These policies generally cover direct financial loss resulting from fraud or dishonesty by employees stealing money, securities or property from the business. External or “third party” cover should also be considered, which offers protection from the impact of computer crime involving “hacking” and crimes concerning theft, forgery, fraudulent alteration and counterfeit.
Crime cover is available to businesses of all sizes, SMEs and start-ups may be considered more at risk due to basic infrastructure which can, at times, lack the resources and security present within larger, longer-established organisations.
It is time for all businesses to recognise the true nature of the threat of crime and fraud. Seeking advice from a professional and experienced broker is the most effective way in ensuring that a business has a tailor-made solution in place that offers the optimum level of protection.