Employees are one of your organization’s most valuable assets. However, their dishonesty can be costly. Everything from scrolling social media during a meeting to sharing confidential documents with an outside source can be considered workplace theft. While some cases are more serious than others, if you are leading an organization, it’s important to stay up to date on current trends. Internal theft can have a major impact on your entire operation, as it is estimated to cost U.S. businesses up to $50 billion a year. From fraud cases to data security, we are covering the common types backed by statistics and trends for 2021 and beyond.
Internal Theft Statistics
75% employees have stolen at least once from their employer. (Source)
More than 30% of business bankruptcies are due to employee theft. (Source)
90% of all significant theft losses come from employees. (Source)
40% of all employees who steal from their work have experienced HR red flags prior. (Source)
60% of employees would steal if they knew they wouldn’t get caught. (Source)
Top Industries for Employee Theft
The three top sectors where insider attacks occur are finance, insurance, and healthcare. (Source)
Finance and insurance have the highest number of perpetrators who are business partners, followed by healthcare and information technology. (Source)
84% of incidents in healthcare occur because the perpetrator is looking for financial gain. (Source)
27% of employee fraud occurs in government, healthcare, construction, and service industries, while 23% of employee fraud occurs in finance, technology, and other sectors. (Source)
Cost of Employee Theft
Every year, business lose up to $50 billion as a result of employee theft. (Source)
Employee theft costs are rising at a rate of 15% per year. (Source)
Cash, property, or merchandise are targets for employee theft. (Source)
People estimate U.S. companies lose 20% of every dollar to workplace fraud. (Source)
Employee Fraud and Embezzlement Statistics
Fraud causes companies to lose an estimated 5% of revenue every year. (Source)
The average fraud case costs a company $1,509,000. (Source)
Fraud cases most commonly occur in these four areas: operations, accounting, executive and upper management, or sales. (Source)
Billing and payroll fraud occurs at twice the rate in small business compared to large companies. (Source)
85% of embezzlement cases are perpetrated by a manager, with one-fifth of cases by a C-level executive. (Source)
79% of cases involved more than one person who committed the crime. (Source)
Cyber and Data Theft Statistics
Insiders are involved in 57% of data breaches. (Source)
20% of cyber incidents are caused by a misuse of privileges. (Source)
Healthcare, information technology, and financial services are the top three sectors where insider breaches occur. (Source)
Employee or contractor negligence causes 63% of attacks. (Source)
Tips for Preventing Theft from Employees
While the statistics above may have you locking every door and file cabinet in your office, the best defense against employee theft is proactiveness. There are plenty of measures your organization can put in place to prevent theft.
Verify Past Employment In the recruitment process, make sure to conduct a thorough background check for all potential hires. When doing so, contact all references, ask why the candidate left past jobs, and conduct a criminal search.
Provide Clear Policies Make sure all employees know that there will be strict consequences for anyone who commits a crime. Write it on paper and have employees sign it so they know exactly what will happen if they choose to steal from the organization.
Conduct Random Audits Carry out impromptu audits where you verify bank statements, ledgers for accounts payable and accounts receivable and any checks issued. Consider hiring an outside party who can do the work for you and bring any unbiased suspicious activity to your attention.
Set Up a System of Checks and Balances For employees that manage financial accounts, establish a checks and balances system so no one person oversees all financial records. At least two employees should be always working together when dealing with sensitive information.
While no employer likes to think of its own employees as potential sources of theft or crime, it’s important to make sure your organization is protected in any scenario. Employee theft and fraud are common occurrences, especially for small organizations. Securing the right Employee Theft Coverage can help safeguard your organization from financial losses related to employee dishonesty. To review your coverage options to ensure your mission is protected, contact us to speak with one of our specialized brokers.