How would you like a 5% increase in your retail or restaurant business? According to an article in The Street, fraud is responsible for an estimated 5% drain on profitability. Stop fraud and theft directed at you from several sources and realize an increase in profitability. Loss Prevention Professionals and Fraud Examiners will certainly verify the negative effects of theft and embezzlement in business at a median loss of $160,000. When applied to the 2009 gross world product, the losses to fraud are estimated at more than $2.9 trillion! That’s trillion! Even I had a double take at that number.

Comprehensive loss prevention programs address the multitude of losses directed at retailers and restaurants. Below are four precautions:

1. Conduct Pre-Employment Back Ground Checks

Hire the best employees with clean criminal histories. Invest in the future of success of your business with a background screen program.

2. Keep an Eye on Each Other

Establish audit programs for policy and performance compliance. Be ready to take action when you find violations and serious breaches. According to the Association of Certified Fraud Examiners, 80% of frauds were committed by employees in one of six departments: accounting, operations, sales, executive/upper management, customer service or purchasing. Are you checking on them?

3. Invest in Fidelity Coverage

Fidelity insurance protects businesses in case of losses due to embezzlement, forgery, robbery, burglary and fraud. Many businesses opt out of such coverage to save money. Fraud crimes often go undetected for long periods because they are hidden so well by those in positions of trust. And that usually ends up being large sums of cash and other assets stolen from the business.

4. Enable anonymous whistle-blowing

Set up an honesty hotline where employees can anonymously report not only theft, fraud, and embezzlement, but sexual harassment, hazardous work conditions, drug use, unethical behavior, etc. Sarbanes-Oxley rules actually require some industries to utilize these business abuse hotlines for employees to report incidences without fear of retaliation. The ACFE has found that those businesses that have anti-fraud training and anonymous honesty hotlines, have lower fraudn losses.

Here at LossBusters, we assess businesses for vulnerabilities to internal and external theft, fraud, embezzlement and other profit draining “holes”. We then provide solutions to plug those holes. Check out this website for additional information.