Chubb Group of Insurance Companies said private companies planning cutbacks and other economy moves face an increasing risk of employee theft, with the current average take for such crimes now well over a quarter of a million dollars.
According to the Warren, N.J.-based insurer, its research shows 36 percent of private companies, many of which were uninsured, experienced employee theft averaging nearly $350,000 within the past five years.
As companies carry out plans for staff reductions and budget cuts–actions which tend to motivate employees to steal funds, equipment and inventory–more companies may now face similar losses, according to Chubb.
Gregory Bangs, manager of the Chubb crime unit, said of the incidence of theft, "It's the perfect storm, despite corporate America's emphasis on a more ethical business culture; employee crime continues to drain corporate coffers by an average of six percent each year.
"Furthermore, many more employees may steal from their employers as a large number of private companies take actions that typically unsettle employees."
According to the 2005 Chubb Private Company Risk Survey, 31 percent of companies plan to outsource major functions or operations, 21 percent plan to reduce their workforce, and 20 percent plan to reduce or eliminate some employee benefits this year.
"Larger firms may be able to absorb the financial shocks of employee crime," Mr. Bangs commented, "but smaller firms may be faced with financial disaster. Surprisingly, our research shows that more than two-thirds of private companies do not buy crime insurance."
He advised, "Regardless of size, strong risk management and ethics programs can help companies reduce the potential for white-collar crime, and insurance can help them recoup some of the losses."
Chubb said it has published a Guide to Preventing Workplace Fraud: Taking Action to Reduce Business Crime Exposure to help businesses create risk management plans to prevent workplace fraud.
The 53-page Chubb handbook discusses the threat posed by various types of fraud and suggests specific risk management strategies. It can be downloaded at www.chubb.com/businesses/chubb3331.html .
"The guide is a good starting point for all companies, especially smaller firms that may not have access to this type of expertise," said Mr. Bangs.
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