UK businesses are facing a spike in crimes carried out by their own employees, more than likely spurred on by the financial pressures of the cost of living crisis.
That’s according to analysis by Zurich Insurance Group, which found that more than 6,000 people were caught stealing from their employers in 2022, a sharp 19% increase on the figures from the previous year. Zurich also reported a rise in claims for commercial crimes, with the average incident costing a massive £140,000.
One of the most high-profile recent cases of employee crime was that of David Hall, former head of income and payments at the University of Brighton, who has been convicted of embezzling £2.4 million from his employer over a 30-year period.
While many of the workplace crimes identified by Zurich involve petty (and not so petty) theft of products from work, the David Hall case highlights how embezzlement and other forms of financial fraud remain the biggest threats businesses face from insider crime. Other examples include a finance manager who stole £50,000 from the double glazing firm he worked for, and a ring of employees who siphoned off £150,000 from a food manufacturer.
As well as pushing up the average value of workplace theft, financial crimes are often well hidden in the complexities of corporate accounting and bookkeeping. It’s no coincidence that the perpetrators are often senior finance administrators like David Hall. They have both the expertise and the access to organisation finances to make fraudulent payments, and then the know-how to cover their tracks with equally fraudulent record keeping. Skilled operators can go undetected for years.
Rogue employees are not the only threat to a company’s financial integrity. Zurich also highlighted the rise in so-called ‘social engineering’ fraud targeting businesses, a form of cybercrime where criminal elements trick employees into divulging sensitive information which allows them to steal from the organisation.
Common examples include ‘phishing’ emails that might request a fraudulent payment, or ‘spoofing’ attacks where hackers build fake versions of business software and try to lure people into logging into the platform, unwittingly giving up their real credentials when they do so.
Keeping a tight rein on financial records
Whether the rogue elements are inside or outside your company, the growing risks of financial crime make it imperative for every business to revisit its reporting and mitigation processes. Regular audits and robust payment controls could end up saving you tens of thousands of pounds.
Tax administration is a particular area to pay attention to. People looking to embezzle money from a business will often use the complexities of the tax system to hide their activities, relying on the fact that an untrained eye would be unlikely to distinguish between genuine and fraudulent payments put down as tax in the books.
But on a positive note, businesses no longer have to rely on human oversight, or paying financial experts to keep a watch on the other financial experts working for them. Nowadays digital tools are available that can keep a tight rein on financial activity, and just as importantly, report concerns and anomalies in terms anyone can understand.
One example is our own VAT Risk Evaluation Tool. In an area of taxation that is becoming ever more prescriptive and complex, our tool is designed to run the rule over your way of handling VAT and assess it for compliance purposes. But as a tool that analyses all potential risks arising from your VAT administration, it’s just as adept at revealing threats from potential or actual fraud.