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About Sam Leeder and Paul Taylor of Actus Insurance, Sheffield

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How can crime affect your business?

Aug 20, 2019

Crime affecting businesses has been changing for many years now -  the traditional thought of a director walking into his building on a morning to find that it has been broken into overnight has been changing over the last few years. So what types of crimes should we be on the lookout for and how can we protect ourselves from the types of crime, theft or fraud affecting businesses in the modern era?


Employee theft/fraud

Something that we all hope will not affect our businesses, this is one of the most likely causes of theft within a business.  UK businesses reported a loss of more than £40m due to employee-related fraud. 


Employee fraud can appear in many forms: a simple theft of office stationery or stock; financial fraud within an accounts department; or even within a sales team generating false orders or selling stock off the books.


Cyber Crime

When talking about cyber crime, we don’t just mean receiving a virus or malware attack but also more sophisticated social grooming of employees, fake invoices and fake director scams.


SMEs who don’t have full cyber infrastructure in place to fully protect themselves are particularly vulnerable - we have seen this as an issue for our clients in recent years.


A fraudsters’ favourite is sending a fake email from a business owner asking another within the business to set up a new supplier or for money to be transferred to a fake account.  Within an owner-operator business we often find that employees don’t ask questions of “the boss” and so simply set up the payment.


Another major issue is the interception of invoices and bank details being changed or a fake email coming from a genuine supplier advising of a change of bank details.


If your business loses money in these circumstances, there is often very little potential recovery from your bank can do as you have intentionally paid the money over.  Once money hits these fraudulent accounts in the UK, it is immediately transferred offshore with little or no prospect of recovering it.


Risk Management

Whilst it often fills many owner/directors with dread, it doesn’t have to be complicated.  The best way to avoid a problem is to be proactive and put some simple procedures in place to mitigate against the risks.  For example, in the case of fraudulent emails, a great strategy to minimise risk is to ensure that there is always verbal confirmation when setting up any new suppliers or making changes to bank details, ensuring that any written instructions are genuine.


Many of the kinds of crime highlighted above are not covered by traditional insurance policies although there are specific Commercial Crime policies that would protect your business in all of these eventualities.  


Please get in touch if you would like to know more..

 

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