Crime White-collar crime continues to increase and incidents are becoming more sophisticated. Economic instability creates a challenging environment for crime underwriting, requiring proactive measures to manage associated risks. The rate outlook for crime coverage is flat to less than 3% for those with solid internal controls.
Employee Dishonesty: Claims involving rogue employees are on the rise, both in frequency and severity. Many fraudulent schemes that began during the pandemic when internal controls were compromised are now being uncovered. This trend underscores the need for robust oversight and stringent internal controls to detect and prevent employee dishonesty. Poor Vendor Management: Inadequate vendor management processes provide an easy gateway for both employee dishonesty and social engineering fraud. These vulnerabilities are increasingly being exploited, highlighting the importance of implementing comprehensive vendor management protocols to safeguard against such risks. Check Forgery: The incidence of check forgery continues to escalate, manifesting through altered, forged, washed or counterfeit checks. This persistent threat requires vigilant monitoring and advanced detection techniques to protect against financial losses.
Economic Concerns: Sweeping changes in Washington have sparked fears of an economic downturn, increasing the likelihood of financial crimes such as fraud, embezzlement and money laundering. Individuals and businesses facing financial stress may resort to illegal activities to mitigate their economic challenges, making it crucial for companies to enhance their financial oversight and fraud prevention measures. Underwriter Diligence: Underwriters are expected to remain diligent regarding controls and processes. They will likely award capacity and favorable terms to organizations that demonstrate state-of-the-art internal controls and processes.
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