Do you consider Employee theft as a Business Risk?



Posted: Sunday, January 23, 2011

by Danny Boles
DFB Security

Thinking about where you work or the Business that you conduct if you had to make a list of the risks facing the Business, would you include employee theft. DFB Security recently conducted research in this area and asked 100 Businesses in Ireland to name the top 3 risks facing their Business. The expected replies ranged from fire, flooding and the downturn in trading, but only a small percentage (7%) named employee theft as a top 3 risk. External theft and crime figured in 35% of responses.

Of course, each and every Business is different with differing risks - but I have yet to come across a Business (excluding sole traders) who did not have some form of employee theft.

So why did only 7% of Businesses mention employee theft as a risk? Well, there are several reasons - Firstly, in the main, employee theft is unseen so it is out of mind. Secondly, all staff are deemed as trusted and thirdly the detail of losses are not analysed in detail to determine the root cause of loss.

There are several causes of loss for any Business but the three main causes are operational failings (i.e. pricing items incorrectly at a lower price), external theft and employee theft.

Not all Businesses ignore employee theft as a risk but it is not seen as a major risk compared to other risks. I have seen companies spend significant investment in dealing with external theft, such as shoplifters but minimal amount on combating employee theft.

Both external and internal theft is a risk to any Business and if the strategy is not robust enough then the theft problem will continue. Indeed, some Businesses fail to admit that there is an internal problem with theft, which means no action is taken to identify and deal with it. Therefore some Businesses don't know what they don't know, which means if you don't what the losses are telling you then you don't know what the cause is.

Recently, DFB Security dealt with a company (retail and warehousing) where the Business shrink was just over 10% but there was no acceptance that there could be employee theft. The loss was written off as external crime, mainly shoplifters and no actions were in place to reduce the losses.

By examining the data in detail, the losses were recorded as 18% operational issues, 25% external crime and 55% employee theft (2% other). Action plans were put in place in all three areas to reduce the Business loss and theft. As a result, 11 employees were apprehended for theft including a respected long term manager. I would expect the shrink result to be significantly reduced this year.

For the next article we will talk about what measures and actions can be introduced to reduce and prevent employee theft. Remember that 10% of employees will steal, 10% will never steal and 80% could be tempted depending on the opportunity.

www.dfbsecurity.com
www.dfbsecurity.com providers of security services across Ireland

Danny Boles is a security investigation professional with 19 years experience and educated to degree level with a BSc in risk and Security Management and a MSc in Police Science and Management.

He is the Managing Director of DFB Security which provides security and investigation services to Businesses in Ireland.

With his academic qualifications and experience, he provides a professional security service.

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