What’s Legal, What’s Risky, and What’s Insurable?
If your SME is using or planning to use electronic surveillance, this article outlines what you need to know to stay compliant.
When internal systems fail, the risks are twofold. Employees may exploit weak controls to commit theft, while employers can also face consequences for payroll errors or underpayments, whether intentional or accidental.
Internal theft often begins with pilfering, defined as the repeated stealing of items of low value or in small quantities, typically by employees over time. While each incident may seem minor, these small-scale thefts can accumulate into substantial financial losses and erode workplace trust.
Recent Australian research shows that employee theft, including pilfering, costs businesses millions annually.
The 2024 ANZ Retail Crime Study revealed that nearly 2% of retail turnover was lost to crime in the past financial year, with employee theft being a major factor in the sector’s $7.79 billion in losses.
By the time employee theft is picked up, the damage is done, costing money, staff morale and customer trust.
That’s why early detection matters. Spotting the red flags of internal fraud can help you act before losses escalate.
Key indicators of internal fraud can include:
- Unexplained or frequent account changes, write-offs, or refunds
- Employees unwilling to delegate or take time off
- Staff whose spending doesn’t match their income
- Missing documents or irregular record-keeping
- Weak oversight of payroll, inventory, or approvals
Fostering a transparent workplace culture and strengthening internal controls are effective strategies to deter fraud before it occurs.
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