Your Accountant will call it Inventory shrinkage – a combination of employee dishonesty, shoplifting, fraud and administrative errors – all of these factors are costing UK businesses millions of pounds in annual revenue.
Of all of these circumstances, theft by employees is probably the most frustrating and difficult crime for a retailer to protect themselves against.
While a Retailers or Shop Insurance policy can often be extended to include fidelity cover, the simplest solution is to take preventative measures upfront.
Theft is Not Normally an Isolated Incident
Typically, employees do not steal from their employer once and then never do it again. Instead, employees steal small amounts over an extended period.
When businesses finally discover the indiscretion, they have lost a significant amount of revenue.
Also, businesses generally do not discover that funds are lost until the economy enters a downturn, and the company examines why their revenue is not as they had expected.
Only then, after questioning where the money went, do they notice that funds are missing.
Smaller Companies Are Often an Easier Target
Smaller companies with fewer employees tend to be victimised more than larger companies.
Not only are these smaller businesses often uninsured to cover their losses, but they've also built up trust and developed relationships with their employees. So, they often are unsuspecting of criminal activity and trust their employees too much.
Larger companies also have the budget for audit committees and risk managers to assess any indiscretions immediately.
What Measures Can a Retailer Take to Reduce The Risk?
For SME businesses, there are four key areas, and while not all of these will be relevant for your individual business, by taking the key elements, you should be able to develop a much more robust defence.
#1 Pre-employment screenings:
- Past employment history
- Personal reference checks
- Drug screening
#2 Employee awareness programmes:
- New hire orientation discussions
- Bulletin/poster board notices
- Anonymous phone hotlines
- Follow-up education
- Payroll stuffers
#3 Asset control policies:
- Refund control structures
- 'Void' receipt procedure
- Rubbish removal controls
- Inter-store transfer policy
- Exit door controls
#4 Physical Loss prevention systems:
- Burglar alarms
- Closed-circuit TVs
- Regular Armoured car pickups
- Secured display fixtures
- Electronic security tags
- Shoplifting signs posted
- Silent alarms
- Observation mirrors
What about Shop Insurance Options?
Employee dishonesty insurance or Fidelity Guarantee offers employers protection from fraudulent acts committed by employees.
If you purchase this type of insurance, either as part of a Shop Insurance package or via a bespoke Crime Insurance policy, you should be able to recover financial losses as a result of employee theft and robbery of the following:
- Computer fraud
- Funds transfer fraud
- Credit card fraud
- Money order and counterfeit fraud
- Other valuable property
Does the Policy Carry Any Typical Exclusions?
There are several exclusions to typical fidelity policies that employers must be aware of:
- Accounting errors
- Income loss if the theft had not occurred
- Restatement or lost statement of profit
- Theft by You, your Partners, Directors or Trustees.
Retailers Insurance Quote
Don't become a victim of employee theft or shoplifting. Protect your business, your assets and your profits by obtaining Fidelity or Crime cover as part of Shop Insurance package.
Insync Insurance specialises in all forms of Business cover, we can Compare Shop Insurance from up to 10 of the UK's leading Retail Insurers in minutes.
You can request a quote online, alternatively, why not book a free review with one of our expert Gurus at a time that suits YOUR diary.