In both good economic times and bad, embezzlement is apotentially costly issue for organizations. This form ofoccupational crime, which involves fraud or theft by trustedemployees or managers, can range from simply stealing cash from acash register or overstating expenses to complex schemes involvingbilling, inventory, payroll or intellectual property.

According to the Association ofCertified Fraud Examiners (ACFE) 2016 Report toNations, occupational fraud amounts to 5% of gross revenuesfor all businesses in a given year. The typical fraud lasts 18months and 56% of the perpetrators in the U.S. were men, 46%women.

Because crimes of embezzlement involve trusted employees, they can carry on muchlonger without detection. These circumstances tend to be especiallyrelevant to nonprofits and government agencies. Indeed, mostembezzlers aren't antisocial, don't have criminal histories, and dopossess stable family relationships and steady job histories.

Major embezzlement schemes involve forgery orunauthorized issuance of company checks often in concert with thecreation of fraudulent bank accounts and fake vendors.

Related: Former insurance brokerage company CFO sentenced toprison

Although over the years the financial services industry has beenhit the hardest followed by non-profits, embezzlement and otherforms of occupational crime can affect any type of organization.Consider the following actual embezzlement cases:

• In 2005, a 56-year-old female financial manager in ametropolitan-area county clerk's court office embezzledapproximately $1 million in a 10-year period. A trusted andwell-liked employee, she embezzled funds from a special accountthat pooled money from traffic fines, court registration fees andother revenues and concealed her crime by forging bank slips. Sheused the money to treat family and friends to lavish trips, and tohelp family with medical and other expenses.

• In 2014, a 56-year-old male chief financial officer of a civilengineering company, pled guilty to embezzling approximately $2.5million from his company more than eight years. The FBI found heused a great deal of the embezzled funds to pay the expenses for anexotic dancer, including plastic surgery.

• In 2015, a 53-year-old female administrative assistant at aprestigious university pled guilty to embezzling more than $300,000from the university over three years. She set up a PayPal accountlinked to her personal bank account and instructed approximately185 students to pay their tuition and fees to the PayPal account.She used the money for personal expenses.

Today, with the potential to access corporate funds through theInternet, intranet and email system, risk managers are uniquelypositioned — and need to be especially vigilant — to help theirorganizations prevent and thwart embezzlement and other forms ofoccupational crime.

Related: Hiscox finds employee theft costs U.S. businesses$1.13M in losses on average

Here are five steps to help in addressing these exposures:

1. Recognize the inevitable

Recognize the inevitable potential for a problem and get seniorleadership's buy-in. Regardless of the type of firm and loyalty ofits employees, occupational crime can strike any organization. Thefirst step is to be realistic and convince the firm's leadership ofthe risk and the potential cost of such crimes.Regardless of thetype of firm and loyalty of its employees, occupational crime canstrike any organization. The first step is to be realistic andconvince the firm's leadership of the risk and the potential costof such crimes.

2. Form a team

Occupational crime is a criminal traumatic event requiring aSWAT type of response. Once leadership is on board, assemble a teamof executives to deal with the exposure. In addition to riskmanagement, the team should include members from legal, finance,internal audit, human resources, operations, informationtechnology, and communications, as well as your firm's insuranceadviser.

3. Ramp up detection

Actively promote your company's policy. Seek out training andnewly developed data-analytics programs. Establish a zero-toleranceatmosphere and policy for occupational crime that comes from topmanagement and communicate it frequently throughout yourorganization. Provide training to make employees aware of thethreat of embezzlement and red flags, such as employees living wellbeyond their means. Establish a telephone hotline and onlinetipline for reporting potential offenses. Notably, the ACFE finds49% of all occupational frauds are detected by hotlines and 39% bytips.

4. Establish and reinforce controls

Work with finance to tighten internal controls, such assegregating duties and establishing a structured system ofapprovals for accounts payable expenditures, restricted access tofinance applications, a list of approved vendors, and protocols forcrosschecking issued payroll checks against active employeelistings. Make sure all employees with relevant responsibilitiesknow what is expected of them to comply.

5. Know how to report an incident

Understand how your insurance policy will respond and theappropriate reporting procedures, including whether and when toinvolve law enforcement, which agency is best suited to handle thesituation, and other appropriate authorities (such as prosecutors)to involve when reporting a crime. Be prepared to get help from aqualified and experienced forensic accountant if needed to quantifya loss. Consider a security consultant as necessary to make sureyou understand the implications of reporting an incident toauthorities and the appropriate law enforcement to involve.

Embezzlement and other forms of occupational crime can becostly. By recognizing the threat they represent and takingappropriate steps to manage the risk, organizations can increasetheir ability to catch offenders faster and prevent theseincidents, altogether. At the same time, by engaging employees inidentifying potential crimes, you effectively deputize them asguardians of the enterprise, which in turn can improve morale,elevate pride, and enhance productivity.

Related: 6 things to know about white collarcrime

Tamara Hajjar is a senior property claims consultant withAon Global Risk Consulting. She can be reached at [email protected].