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Risk Management for Employee Theft

Date: Thursday, August 13, 2015
Watch Now
Time: 11:00 a.m. (ET) / 10:00 a.m. (CT) / 9:00 a.m. (MT) / 8:00 a.m. (PT)
Length: 60 minutes
Fee: Free
Speaker: Robert J. Duke, Corporate Counsel, The Surety & Fidelity Association of America
  Robert Flowers, Second Vice President, Travelers Bond and Financial Products    
Category: Training and Education  
A fidelity bond provides a business insurance protection against a risk that a business owner may not want to consider – employee theft.  Unlike the burglar, the vandal or the computer hacker who “invades” the business’ premises to damage or steal property, an employee has a relationship with his or her employer.  Somehow, being wronged by a stranger can be easier to accept than being wronged by an employee.  An employer, in making the decision to hire the employee, has made a decision to entrust the employee to perform some function for his or her company.  When an employee steals from his or her employer, the employer is forced to question the hiring decision and the trust placed in the employee.  Although the employer could follow the path of “see no evil, hear no evil, speak no evil,” a strategy of avoidance is harmful in the long run. 

A strong system of internal controls can reduce the opportunity for theft significantly.  Internal controls are especially critical for a contractor whose employees are scattered at various job sites.  In this case, systemic controls are necessary because centralized oversight of employees physically located in more than one place is not possible. To protect the bottom line, it is imperative that a contractor implement the following internal controls:

As a second line of defense, in case the internal controls are overcome and a significant loss occurs, a contractor needs fidelity insurance.  Most insurance companies provide employee dishonesty coverage under a policy that provides multiple coverages including employee dishonesty and theft of money and securities by persons other than an employee.  Although there may be some differences among the fidelity policies available in the market, they are similar in terms of the structure and coverages offered.  The Crime Protection Policy, developed by The Surety & Fidelity Association of America, offers six different coverages.

  • Create an awareness of the exposure to employee theft.
  • Identify techniques and internal controls to mitigate the employee theft exposure.
  • Learn about the coverages offered by a fidelity insurance policy.
PowerPoint Presentation(PDF)

 Robert J. Duke graduated with a J.D. from Columbus School of Law, Catholic University in 2005. After graduating summa cum laude from Loyola College of Maryland in 1988 with Bachelors in Business
Administration, he went on to obtain a Masters in Business Administration from Loyola College in 1992. Robert started in the surety bond industry as a company underwriter and broker for 8 years. He joined The Surety & Fidelity Association of America in 1999 as Director of Underwriting, went into private practice from 2006-2008 and returned to SFAA in 2008 as Director of Underwriting/Counsel. Robert has published several articles for construction industry trade magazines regarding issues such as onerous bond forms, green building construction, accounting standards and fidelity bonding. 

 Robert Flowers, 2nd Vice President,  has over 20 years of experience handling Fidelity, Surety and Management Liability claims.   Bob is currently the head of the Crime and FI Bond claim team for Travelers Bond & Specialty Insurance.  His team is responsible for Commercial Crime, Financial Institution Bond, First Party Cyber, ID Fraud and Kidnap and Ransom claims. 
After graduating from the University of Nevada, Bob began his career handling Construction and Commercial Surety claims for another carrier.  Bob’s role expanded to a claims manager and subsequently a regional manager responsible for underwriting and claims for the west coast.  Bob joined Travelers Bond in 2001 working out of the Tampa, Florida office where he was responsible for handling Fidelity, Surety and Management Liability claims in the Florida Region.  In 2007, Bob moved to Hartford, Connecticut where he served as a Managing Director for the Bond Field Operations.   

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