Chicago, IL (PRWEB) April 18, 2013
Trust but verify was a phrase President Ronald Reagan coined when dealing with the Soviet Union. However, it is also a solid policy for small-business owners who cede control of a customers proprietary and financial information to employees. While owners should trust their employees, they should also verify that their insurance policies are capable of protecting against any rogue actions that could negatively impact the business, according to a new TechInsurance alert.
TechInsurance, the nations leading online insurance provider for information technology businesses, today issued a warning that small businesses are particularly vulnerable to employee fraud. The Association of Certified Fraud Examiners (ACFE) estimates that one case of employee fraud can last up to 18 months and costs an average of $ 140,000.
Fidelity Bond Insurance is a type of coverage that small businesses often purchase to comply with a clients contract, said Ted Devine, CEO of TechInsurance. Yet for small businesses, which frequently endow a few employees with significant responsibility, employee fraud creates a risk that could potentially sink the business. Thats because most general insurance policies exclude coverage for acts that are considered intentional, including acts that are wrongful or illegal.
And, Devine notes, fraud is more challenging to detect in IT businesses. Unlike a retail store, a technology business cannot monitor theft by installing cameras alone as it may not protect their data assets. Instead, having access to a customers network and financial information opens up the possibility for a more sophisticated level of fraud.
Whats more troubling is that fraud is typically an employees first offense, ACFE says meaning that background checks and employment screenings are ineffective predictors of this behavior. When considering a purchase of Fidelity Bond insurance, TechInsurance recommends that small businesses consider the following: