Perpetrators often were people who were smart, well-liked, and those whom one would least expect. Four driving factors could turn a trusted employee into a criminal, including pressure, opportunity, capability, and rationalization, Hiscox said.

- Pressure: An employee was in a situation that, seemingly, only could be relieved by additional funds. This pressure often resulted from gambling, investment, or business losses; medical expenses; or significant debt.

- Opportunity: More senior, trusted employees may be more likely to have access to secure files and authority of controls, providing more opportunities to fix the books and cover up their crimes without detection.

- Capability: Embezzlers also often were the ones with the skills and knowledge to commit fraud.

- Rationalization: Perpetrators often rationalized their crime by convincing themselves they were providing for their family, felt underpaid or that they were not treated well, or thought others were stealing, too.

“Understanding the reason why employee theft happens and the psychology of a potential perpetrator are the first steps to mitigating fraud,” said Mr. Karpp. “Once you understand that, enacting controls will help manage exposure for businesses of all sizes.”

Data from the 2016 Hiscox Embezzlement Study revealed several common traits of a “typical embezzler.” According to the report, the median age of an embezzler was 49, and women represented more than 56 percent of perpetrators.

The data showed that most instances of employee theft involved bookkeepers, which accounted for 11 percent of all cases. A quarter of all employee theft schemes were perpetrated by employees in senior roles within the organization. Senior level executives left the most punishing mark on the organization with their theft, orchestrating schemes with a median loss of $966,000. The healthcare industry had the highest percentage of managers who embezzled, with 65 percent of fraud cases perpetrated by those in a management position. Among municipal governments, there were slightly more managers (63 percent) than employees (38 percent) who embezzled, but the median loss for schemes perpetrated by managers was nearly three times as high.

U.S. organizations with up to 500 employees experienced a median loss of $341,710 per year due to employee theft. Although the sizes and types of theft varied by industry and region, small businesses were found to exhibit higher instances of embezzlement overall. Over 80 percent of thefts occurred at companies with fewer than 150 employees, and just under half had fewer than 25 employees. In both small businesses and large organizations, funds theft was the most common scheme in nearly every industry.

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