Tag: management liability

It’s important to trust your employees, but equally as important to be prepared for the day that one may let you down.

Employee fraud is big business, and getting bigger all the time. Between April and September 2016, 143 frauds took place in Australia, with a total value of $442 million, according to KPMG’s fraud barometer.

The most common perpetrators are ‘business insiders’, with employees and management accounting for more than half of all reported frauds. Some 22% of frauds were facilitated through the use of technology.

Detection is taking too long – 40% of frauds in Australia take place over a five-year period before being discovered – and if you think it’s just the big firms at risk and SMEs are immune, think again!

For many small and mid-sized businesses (SMEs), the vulnerability to fraud can be compounded due to their often informal nature and the fact that fewer staff members can result in less oversight – and a lack of checks and balances. The impact, however, can be devastating with KPMG reporting the average value of each fraud at $3.1 million.

The good news, however – an insurance solution is available to give you peace of mind should the worst happen. Crime cover, an option available as part of many Management Liability Insurance policies reimburses the insured for a loss directly resulting from dishonest acts of their employees. This solution covers direct financial loss, not a consequential one, in other words, the loss should be of money or goods of the insured.

Purchasing Management Liability Insurance is imperative for business owners, however, it is equally important to ensure systems and processes are in place to reduce the likelihood of fraudulent activity occurring in the first instance.

When the future of your business is at stake, it pays to put aside emotions and think practically.
You should always consult your local Adroit broker for advice on the range of policies available to suit you and your business needs.

Get in touch with your broker today and stay ahead of fraudsters!

Avoiding legal landmines with Directors’ & Officers’ cover

Lawsuits against big corporations tend to capture the spotlight, but executives at smaller businesses shouldn’t be complacent about the potential legal landmines they may face.

In such a litigious environment, and with regulators focusing more and more on corporate culture, there are many areas where directors and managers may find themselves exposed if they haven’t taken steps to lock in protection.

Research says directors’ and officers’ insurance policies are often overlooked at the smaller end of the market, particularly among micro-enterprises.

Many SME (Small and Medium-sized Enterprises) decision-makers often lack knowledge about where and how easily management liability might arise and also about the nature of the Directors & Officers’ Liability (also known as D&O) product and what it covers.

Nowadays, SMEs can easily become the target of legal actions, with customers, suppliers and employees just as aware of their rights whether the business is large or small. Australian regulators are also increasingly active across the financial services spectrum.

Often, company directors and managers believe their individual risks are being covered by other parts of the business’s insurance package, however, that is all too often not the case.

Professional indemnity VS Management liability

Professional indemnity insurance, for example, covers activities of a business, whereas management liability policies, which include directors’ and officers’ cover, provide protection where third parties claim for losses due to mismanagement.

The directors and managers of an SME can individually face claims for actions alleging fraud or other breaches, engaging in unfair competition, defamation and accusations of other illegal conduct, however, a typical D&O policy will cover these representation costs, such as when a person must attend an inquiry, legal expenses in defending a claim and compensation paid to resolve an issue.

SMEs often put a strong focus on making sure insurance policies are in place for property, fire and business interruption, however, directors’ and officers’ cover is also a vital area to address.

If you’re a manager or director of a company, review your options with your risk adviser today.

Don’t Be Wrong-footed By HR Slip-ups

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HR slip-ups are costly. No matter how stringent the HR processes you can never completely avoid the risk of claims against your company by employees.

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Tough economic times can raise workplace friction

 

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The owners and managers of businesses must sometimes wonder about the number of risks they will need to deal with as they begin another working day. No matter how big or small the business, the financial exposures they personally face as a result of something going wrong are vast. Leaving aside the physical risks such as fire or accident, the exposures related to the management of the business itself are an everyday fact of life.

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