The impact of employee theft can rock an organization to its core. It threatens the trust employers place in their teams, damages morale and can cause financial devastation. In 2015, the first Hiscox watchlist shed light on at-risk organizations and the profile of a perpetrator. This year, Hiscox digs deeper into why seemingly good people go bad, and further highlight the greater risk of embezzlement for mid-sized and smaller organizations. Managing an employee’s control of and access to transactions is key to preventing and detecting embezzlements.

The 2016 Embezzlement Study incorporates employee theft cases that were active in the US federal court system in 2015, specifically those cases occurring in companies with fewer than 500 employees, which represents 69% of all Federal cases reviewed. Though it may seem counter-intuitive, smaller organizations with tight-knit workforces are particularly vulnerable precisely because employees are trusted and empowered. 

Here are some highlights from the 2016 Embezzlement Study:

  • Four of every five victim organizations had fewer than 100 employees; just under half had fewer than 25 employees.
     
  • More than 40% of thefts were committed by an employee in the finance/accounting function.
     
  • One out of every three employee thefts involve organizations in financial services or non-profit industries.
     
  • Average loss = $807,443
     
  • Those with the most access to and control over the money take the most. The positions with the highest frequency of embezzlement are made up of employees with the access to money or more tenured managers who oversee the financial controls.
     
  • The type of fraud embezzlers can commit varies by industry. What doesn’t change, however, is the need for access to funds. In the majority of cases we studied, managers were more likely than employees to steal. 
     
  • In 75% of the industries studied, managers embezzled more often than employees.

Download the full eguide to learn more about how embezzlement can affect even the smallest of companies and how to protect yourself.

businessman in handcuffs