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The Actuary The magazine of the Institute & Faculty of Actuaries

Marsh sounds alarm on corporate fraud protection

A sharp rise in the number of UK companies buying fraud insurance protection is expected, as the world economy continues to deteriorate, according to insurance broker Marsh. The number of insurance claim notifications relating to fraud is also expected to grow in 2009.

Dean White, a director in Marsh’s Financial and Professional Practice, said: “Reported fraud cases in the UK were up 15% on last year but this probably masks the true picture. As a result, many of our clients are increasing their levels of fraud insurance protection and expanding their coverage to include computer and data-related fraud.”

Good risk management is vital in understanding and addressing the threats posed by corporate fraud and may mean the difference between survival and failure for many enterprises. Marsh’s recommended actions for vulnerable companies include:

>> Vigilance: look out for increasing levels of employee stress or out-of-character behaviour patterns
>> Controls: ensure segregation of duties in high risk areas; enforce holidays and the handover of work >> CV check: if hiring new staff take up references and check qualifications
>> Security: ensure that exit procedures are robust and that both physical access to premises and computer access are appropriately limited or removed
>> Staff ‘buy-in’: Ensure that a comprehensive whistle-blowing policy is in place; encourage staff to raise concerns about malpractice and create an open working environment.