How to Mitigate Theft and Fraud in Your Business

Apr 1, 2021

With the myriad of challenges and issues that businesses have had to navigate this past year, it can be easy to become distracted and lax with basic protocols and controls designed to mitigate losses due to theft and fraud. Historically, an increase in theft and fraud incidents has occurred during recessionary times and down economies. Pressures associated with high unemployment can also drive undesirable behaviors within one’s customer base and workforce.

Even with all the distractions, it is critical to remain diligent with the requisite efforts and proper level of investment to detect and prevent incidents of this nature from having a negative impact on your business.

Begin by implementing solid internal controls that limit access to certain areas or resources to approved personnel only, strong separation of duties within various business functions, validation controls within shipping and receiving areas, and data analytics and metrics to identify suspicious trends or transactions.

It is key to improve employee communications. It may sound trite but get to know your employees. Doing so can help you recognize signs of stress and identify certain behaviors before they become an issue. Talk with your employees frequently. Take note of specific characteristics and behaviors such as employees who exert excessive control over certain functions, provide vague responses to questions, are reluctant to take vacations, work odd or extra hours outside of the normal business hours, or those who exhibit extravagant lifestyles that are not commensurate with the individual’s salary or compensation structure. While meeting just a few of these criteria should not sound an alarm, the more of these behaviors or characteristics associated with an individual could signal an issue that warrants further investigation or, at a minimum, a message that an employee needs help.

Another critical area to examine relates to theft from external sources such as customers and suppliers. Start with emphasizing the importance of customer service.  The last thing a thief wants is to be noticed. As such, train employees to actively engage and interact with all customers on the sales floor and ensure they understand the rules on which areas customers are restricted from entering such as stock rooms, production areas, and any other areas where fraudulent activity or potential accidents could occur. Suppliers should be restricted to certain areas at certain times and it is critical that solid receiving practices are adhered to as vendor theft can be a major source of loss if the proper protocols are not followed with counting, inspecting, and handling merchandise or raw materials.

If you would like assistance with developing internal controls or loss prevention procedures to address theft and fraud issues in your organization, please contact us!