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How to protect your business from theft – internal and external

16 May 2019 Dean Delport, Senior Property Underwriter at Santam

In February this year, a Standard Bank employee stole a million from the bank through a card clone scam, and MTN asked a former employee to pay back the R53-million (plus interest) she stole over a seven year period. Santam claim statistics show that fidelity insurance – internal theft of assets like money by an employee – is on the up, while external theft by criminals seems to have been relatively static over the last five years.

Due to diligent partnerships between insurers and businesses to proactively improve security, losses by theft have been well managed, but still range anywhere between R70- and R100-million in any given year. Fidelity insurance is on an upward surge, with claims varying from R3.5-million to R15-million.

With external and internal theft threatening companies, owners need to be extra vigilant and ensure their insurance is adequate and up-to-date. These two kinds of theft are not exactly the same in nature and require slightly different insurance approaches that aim to protect the business in similar ways.

Theft insurance


Theft insurance deals with theft, not by employees of the business, but by external parties. Due to the high levels of crime in South Africa, the majority of businesses have taken positive steps in protecting their assets by introducing risk reducing measures. These measures may include:

• Security alarm systems, with 24-hour monitoring and response;
• Camera systems for surveillance;
• Security guards on the premises;
• Security gates, fences and window grills;
• A combination of all the above mentioned;

Insurers often assist businesses in identifying risk areas and proposing minimum risk reduction requirements, which are aimed at reducing the risk of loss by theft or attempted theft. While these measures do not always guarantee that a theft will not occur, they usually mitigate the severity of such losses.

The type of business and the commodities contained at the premises often dictate the likelihood of theft or attempted theft. Attractive goods that are easier to sell are often targeted and so these goods need to be well protected. Examples include items like computers, laptops, cell phones, jewellery and cameras. In more organised crime, involving syndicates, the items could range from motor vehicles, machinery, equipment and any other items specifically required by such syndicates. It’s highly advisable for businesses to conduct frequent audits to make sure all items are accounted for – especially connected devices which hackers could potentially target to obtain sensitive business information. This is a big consideration as cybercrime increases.

Theft insurance also provides very limited cover for the personal property of employees – clothing or items they bring to work every day. Theft of intellectual property is not a feature of theft insurance and is a specialist field of insurance offered by, for example Lloyds.

Crime remains a constant threat to any business and criminals keep abreast of security improvements, which means that risk management concepts need regular revision to ensure they remain relevant.

Fidelity insurance


Unlike theft insurance, Fidelity insurance is concerned with theft of business assets by employees of the business. Such assets can be in the form of money, financial transactions or stock of the business.

The internal controls of the business are important, since the risk of loss by theft can be more complicated to identify, so it can take longer to realise theft has occurred. Employees of the business must be properly checked in terms of:

• Past criminal records;
• Employment references from previous companies;
• ITC verification;
• Qualifications being legitimate and relevant;

Internal controls must ensure that authorisation levels are in place, so that an employee does not have sole authority on large transactions. Audits may assist the business to establish problem areas or aspects of processes that have inherent weaknesses – and proactively improve these. Employees who plan to steal from the business will spot the weaknesses and exploit these, so businesses need to be vigilant.

Over the last five years, the levels of crime by employees has fluctuated, but the trend reflects an upward movement. Going forwards, businesses need to be more cautious than ever before and to utilise all means of protection at their disposal – including adequate insurance cover and security advice from insurers.

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