Nearly 25 percent of employee thefts involve large-scale losses of more than $1 million and 29 percent are carried out over five or more years.
That’s according to a study on embezzlement by specialist insurer Hiscox. High-loss cases often result from schemes that repeatedly divert small sums of money over time, making them difficult to detect. These schemes typically go on for years. The average loss for cases that continued for five years or more was $2.2 million, and for cases lasting 10 years or more, the average loss was $5.4 million.
The 2017 Hiscox Embezzlement Study found that U.S. businesses victimized by employee theft lost an average of $1.13 million last year. Small and mid-sized companies (fewer than 500 employees) were disproportionally victimized, representing approximately 68 percent of cases.
Funds theft is the most common embezzlement scheme, used in more than one-third of all cases, followed by check fraud (22 percent). Funds theft is most commonly perpetrated by women (56 percent) while 70 percent of check fraud cases occurred at companies with fewer than 100 employees.
Although there is no “typical” embezzler, Hiscox reported some common characteristics: a median age of 48 years old; slightly more women than men commit this type of crime (51 percent vs. 49 percent, respectively); and finance and accounting are the most common job functions of embezzlers (37 percent).
Embezzlers do not discriminate when picking their targets — businesses of all sizes and industries may be impacted, the report said. Although large companies (500 employees or more) represent only 24 percent of cases, they tend to suffer a higher median loss compared to small and mid-sized businesses ($452,025 vs. $289,864).
Of the industries examined, financial services accounted for the highest number of cases of employee theft (18 percent), as well as the highest total loss across industries — at more than $120 million for the year.
Five common employee-embezzler traits to watch for, according to Hiscox, are:
- Intelligent and curious: Often eager to know how everything in the office works, they learn the processes and manipulate them.
- Extravagant: The may be living a lifestyle out of proportion to their salary.
- Egotistical risk-taker: An embezzler is often a rule breaker in and out of work life.
- Diligent and ambitious: An embezzler may come in early, leave late, and never take vacations in an effort to keep from being caught.
- Disgruntled: Those who feel they are treated unfairly may be tempted to steal to “even the score.”
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