Protect Your Business from Internal Threats

As well as serious external threats such as armed robbery, carjacking, burglary and arson, small business owners must also be aware of and concerned about internal threats to their business. Studies show that internal theft accounts for more than one third of stolen money and products.

Nearly every day one reads about a trusted church, charity or local small business employee who was caught stealing.

The employer is shocked at the discovery and fellow employees can’t believe it. He or she was the last person they would suspect of stealing.

But unbeknown to his or her employer and fellow employees, the person had a drug and/or gambling habit, was in dept, was disgruntled, or simply had a larcenous bent.  

So without being unduly suspicious of one’s employees, a business owner should establish procedures, policies and programs that protect the business from internal theft.

Studies have shown that businesses with low turnover rates also have the lowest internal theft rates. Long-term employees and newer employees who believe they have a future with the firm feel invested in the business and they generally don’t steal.

Security professionals believe the below basic tips will help protect your business against internal theft:   

• Conduct a background check and interview all job applicants. Hire a screening service if you can afford it.
• Install a strict code of conduct and ensure that all employees are made aware of it. Inform employees that anyone caught stealing will be fired, arrested by the police and prosecuted.
• Install internal and external cameras that record. Place a camera on all doors to record what goes out the store.
• The owner, manager, security person, or all three if the business has them, should be a constant security “presence.” They should roam the business establishment, letting themselves be seen as they casually inspect
• Inform employees about security measures, such as cameras and inventory controls. Make them part of the security team.
• Conduct full inventories regularly and spot checks on occasion. Keep accurate records on cash and product inventory. The person conducting the inventories should be someone other than the person responsible for maintaining it.
• Establish a key control system and appoint a key control officer to manage the system.
• Keep keys in a locked cabinet and keep daily records of keys issued.
• Number each key and have employees sign for keys when they are issued.
• Have keys stamped DO NOT DUPLICATE.
• Change the locks if a key is lost or when an employee leaves the business.
• Don’t issue keys to contractors and cleaners. Have them sign for keys and then return them at the end of the day.
• If you can, replace key system with access cards. Access cards can’t be duplicated and they can be deactivated when reported missing or when the employee’s authorization ends. Access cards can also control the access of the person the card is given to.
• Establish purchasing procedures. Require two signatures on all purchases.
• Establish a requirement for supporting documentation for each purchase.
• Use pre-numbered cheques in sequence.
• Establish procedures for handling cash.
• Provide a receipt for every transaction.   
• A manager should sign off all voids and over-rings.
• Limit the amount of cash accumulated in any register. Install a drop-safe for excess cash.