At a glance
- This type of crime is becoming complex and difficult to identify as fraudsters become more ingenious and technology savvy
- Total lost to fraud in UK was £52 billion, according to the most recent 2013 government study
- Zurich, with its recently re-launched and market-leading commercial crime wording, can offer broad cover to deal with a range of events – sometimes for as little as £200
This article counts towards accumulating your annual CII CPD structured learning hours for Supply Chain and Emerging Risks.
By reading this article, and correctly answering the three questions underneath, you will have achieved the following learning outcome: Describe the key principles of a supply chain risk management strategy and Identify key emerging risks and describe their main characteristics.
Visit the CPD Hub to log in and begin accumulating CPD hours.
Too often fraud raises its ugly head in the headlines. There was the Goldman Sachs secretary who stole £4.5 million from her employer, a fraud manager who stole £2.5m, a law firm partner who fiddled his expenses to the tune of £1.2m, and the accountant who stole £3.7m from his employer over several years.
Yet these individual stories comprise mere rounding errors when compared to the total lost to fraud in the UK, which, according to the latest National Fraud Authority report, was £52 billion in 2013 – £15.5bn of it to the private sector and almost £20bn to the public sector.
Giving clients insight into an undersold product
Helping clients understand where the risks lie is a good way to get their attention. Brokers can then sell the right kind of protection against fraud, says Alex Morgan, Head of Management Liability at Zurich.
“Everyone is scared of fraud via the internet at the moment but they are more likely to lose money from the guy in accounts who is cooking the books, but they trust him and so don’t insure against that threat,” he said.
The message is a strong one for brokers, adds Alex. “Crime is an undersold product and your customers should consider buying it from us because of its breadth of cover.”
The most common fraud is fund transfer type fraud committed by an employee working within the finance function of a company, typically carried out by a single person over a number of years. Those trading overseas also need to tread warily, paying financial inducements to secure business is rife globally, says Ernst & Young. Supply chain fraud involving collusion between external suppliers and internal employees is also a concern.
Increasingly complex nature of fraud
And it’s clear that commercial crime across all of these categories is becoming increasingly complex and more difficult to identify and categorise as fraudsters become more ingenious, technology savvy and motivated by tougher financial times.
“In a more troubled economic climate, there are more incentives and opportunities for people to pilfer and, at the same time, companies are looking harder and discovering more fraud,” said Alex Morgan, Head of Management Liability at Zurich.
“The increasingly complex nature of fraud is also being driven by technology given the profusion of trade being done by computer, and supply chains that extend online and ever further across borders. Information is moving faster and it’s easier to access systems to steal.”
Just £200 for peace of mind
In a more troubled economic climate, there are more incentives and opportunities for people to pilfer and, at the same time, companies are looking harder and discovering more fraud
Alex Morgan, Head of Financial Institutions & Management Liability at Zurich
It means having the right cover is more important than ever. Zurich, with its recently re-launched and market-leading commercial crime wording, can offer the broadest cover to deal with a range of events. And for £200 or £300 – the starting price for such cover – it could save a company a fortune.
Zurich’s policy ensures protection and peace of mind against a range of criminal activity. Crime is an under-sold product and the cover needs to be wide enough to provide decent protection, says Alex.
“You want to have a broad definition of what constitutes an employee, for example covering volunteers and secondees in your business,” he said. “You also want to have broad cover against hackers stealing your money, for example. And you want to make sure you have a broad definition of what constitutes assets being stolen. It’s not just cash, but also other people’s property in your care, custody or control.”