Another conference has finished and what a conference it was! There was a super attendance at our Insurance Program lunch. It is always a pleasure to meet existing and potential insured members.
The presentation Lessons from Touching a Hot Stove was one of my favorites. Five long-time CSIA members stood up and revealed details of their personal business disasters. Both witty and illuminating.
One of the disasters discussed involved employee dishonesty which resulted in a substantial loss exceeding $400,000. Employee dishonesty is a subject that I often find members not taking seriously enough, thereby leaving themselves wide open to this hazard. Here are a couple of points you need to consider. Any employee who is in the position to steal your money or property is by definition trusted by you. If they were not, you would not have given them the job. Typically, an employee who ends up stealing from you has suffered a change in personal circumstances of which you are unaware. In the good old days, the change usually involved marital problems or race horses. Nowadays, our lives have gotten much more complicated and the reasons are far more varied.
One example of a real loss suffered by a CSIA member not discussed at the conference session involved an employee whom the owners of the business met the day she was born. They were her Godparents. They hired her at age 18, and put her in charge of the books at age 23. At 25, she discovered gambling, and by the time she was 27, had stolen $250,000 from the member.
Again, the people who can do this are people trusted by you.
So, what should you do? First, you need to get a full audit from an outside accounting advisor. Not a review, but a full audit. Request recommendations about how you can tighten your systems to ensure that your exposure to employee theft is minimized. Then you need to buy insurance, not for what you think an employee would steal, but for how much they actually could steal.
The Lessons from Touching a Hot Stove program has been part of several CSIA Executive Conferences. They provide real lessons, because those sharing their mistakes also share how these situations made them better in the end. Make sure that this presentation is on your list for the 2017 Executive Conference.
For more information on this article or our insurance programs in general please contact our insurance Program Manager, Paul Barnard. You can reach Paul either at paulbarnard@csia-insurance.com or +1 610-507-6595.