A study conducted by the Association of Certified Fraud Examiners found that the average business loses nearly six percent of its total annual revenue due to losses involving employee theft, fraud and embezzlement. The American Management Association estimates that up to 20 percent of the nation’s business failures are either directly or indirectly caused by incidents of employee dishonesty. In most instances, the thefts often are for small amounts over prolonged time periods, rather than for a huge amount at once.
Small businesses are especially vulnerable to the effects of employee theft, as they often operate at such slim margins that the loss of revenue can mean the difference between staying in business and shutting the doors. Since most business insurance policies either do not include crime coverage or supply only minimal coverage for loss of income due to employee dishonesty, business owners should consider adding fidelity coverage to their existing insurance plans.