Corporations lose tens of billions of dollars a year through theft and fraud, with check forgery and unscrupulous employees among the biggest culprits. The increase in these white-collar crimes over the years may be attributed to company downsizing and the inability to segregate duties — as well as technological advances, such as computers, telecommunications and the Internet.

Today, it’s easier than ever to forge checks and steal nearly anything, including money, company secrets and other intellectual capital. Yet, with all they have to lose, many corporations do not take the necessary precautions to protect themselves from theft and fraud.

So what can treasurers do to protect their most valuable assets? The first step is to become aware of the threats to your company’s finances and information. Once you’ve identified the risks, experts suggest developing a comprehensive plan and strategies to combat them.

Your Most Significant Risks

Even if you have the most state-of-the-art alarm system in place, your company may still be exposed to threats from both within and outside, including:

  • Employees — With access to inside information and knowledge of your company’s layout and security measures, employees pose one of the biggest threats, according to security experts. Employees may perceive a negative job review, layoff or other adverse job action as a legitimate reason to sabotage or steal from their employer. In addition, personal, medical or financial difficulties sometimes cause the most honest employees to consider criminal acts.
  • Vendors and Customers — If you’ve established a special relationship with vendors and important customers, it's easy to become lax in your security, allowing them to enter sensitive or protected areas of your company. However, while there, they may obtain confidential information and critical company secrets.
  • Criminals and Competitors — Your competitors may resort to corporate espionage, coercing your employees into revealing confidential information or paying professionals to steal information by hacking into your systems.
  • Computer and Systems Attacks — These acts are intended to steal, alter and disrupt information, or to destroy data and computer systems. They may include viruses, session hijacking, wiretapping, and eavesdropping.

Strategies for Protecting Your Company

There are a number of steps you can take to safeguard your company from these risks. They are:

  • Screen Your Employees Carefully — Start with the hiring process, using background checks on everyone from clerical workers to the CEO, especially those who will have access to confidential information. Watch employees for changes in behavior, spending patterns, work attendance, physical appearance, and job performance. These things can be the first signs of financial or family difficulties, addictions, psychological illnesses, or other problems that could be detrimental to your company.
  • Segregate Financial Responsibilities — Although difficult in today's downsizing environment, it's important to have at least two people responsible for accounts payable. In addition, the authorized signers should not be the same people who reconcile the accounts.
  • Reconcile Your Books at Least Every 30 Days — In fact, large-dollar items should be reconciled daily. By reconciling promptly, you can detect check fraud and any other irregularities quickly, and then act immediately to minimize exposure to further losses.
  • Control Access to Restricted Areas — Use passwords, keys and badges, eye scans, fingerprint scans, and other electronic security to limit access to offices and computer systems. Hire security consultants regularly to ensure that these measures are being used and followed.
  • Use Detection and Anti-Virus Programs — Install programs on your computer and telecommunications systems that alert you to intrusions or viruses. With alarms or warning messages, you’ll be notified of viruses, the use of unauthorized passwords, when repeated passwords have been tried, if an unauthorized user is attempting to enter your systems, and many other potential problems that could disrupt your business. To make them as effective as possible, your anti-virus and detection programs should always be operating.

Identify Problems Before They Get Out of Hand

If you’re not on your guard, corporate theft and fraud could occur right under your nose. That’s why it’s critical to know your risks and crucial to have a plan in place for mitigating them.

This article appeared in Crain's Detroit Business, November 2003. (CO)

John Manzella
About The Author John Manzella [Full Bio]
John Manzella, founder of the, is a world-recognized speaker, author and an international columnist on global business, trade policy, labor, and economic trends. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.

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