An undeniable reality is that white collar crimes at both small and large businesses and even nonprofit organizations in Australiaare on the rise according to the latest industry specific research reports published by reputed bodies such as BDO Kendall and the IH Group. In the corporate sector, these crimes can be collectively looked upon as a sleeping giant, ready to wake up anytime soon and consume one small, medium or large scale organization at a time.
Why, you may need Fidelity Insurance!
A large number of corporate frauds and other malpractices often go undetected for 100s of days before they’re exposed, potentially resulting in significant financial losses for a businesses.
Understanding Fidelity Insurance
Fidelity Insurance, protects your business from financial damages arising due to dishonesty of any person, the organization has employed.
Common Examples of Employee Dishonesty
- Incorrect invoicing by an employee in order to benefit a third party a vendor, a supplier or the organization itself.
- Misuse of funds.
- Theft of tangible (hardware, equipment etc.) or intangible (reports, data, customer records etc.) assets of a business by an employee.
- Payroll fraud planned and executed by an employee in accounts department or a senior official.
- Sales fraud by manipulating the sales system of a company for example siphoning off extra money from customers.
- Stock theft.
Note: Such crimes are not covered by general liability insurance or property insurance. Among all these crimes (and more), its embezzlement of funds that’s by far the most common corporate crime in the ‘breach of fidelity’ category in Australia. Accounting errors and financial losses incurred due to a mistake that did not benefit any official or company employee (unless proved otherwise), do not qualify as white collar fidelity-crimes.
How to Deal with Such Frauds
The best way to deal with such frauds is to adopt a holistic approach.
- Prevent frauds by ensuring transparency across the organization. Make it a point to fix accountability on various officials, managers and junior employees when they have decision making powers.
- Detect frauds by ensuring routine financial and operational audits. Frauds can sometimes go undetected for many years at a stretch!
- Respond on time to each detected fraud or breach of fidelity after consulting a legal counsel.
Get Fidelity Insurance
Even when you’ve got a mechanism based on a holistic technique in place, your organization is not completely invulnerable to employee crimes. You should have a fraud risk management strategy with Fidelity Insurance at its heart. Most business owners have the misconception that their ‘business insurance’ policy is more than enough for protecting their interests against all types of financial losses and other damages. Although a handful of business insurance policies do provide fidelity insurance cover it is generally too small to be of any help should the need arise.Google+