Security Incidents, Criminal Behavior and Employee Malfeasance

Posted on 22 October 2007 by LegalBeagle

More than four out of ten Swiss companies claim to have been victims of criminal activity from their own employees, according to a study by Price Waterhouse Coopers, which surveyed a variety of employers in Switzerland.

The typical profile of the employee likely to be a risk for his employer is a man between the ages of 30 and 40, most often with large managerial responsibilities within a company, career-oriented and leading a luxurious lifestyle. This is the profile of the type of employee most likely to engage in criminal acts against his company, which, on average costs close to CHF 3 million to the victimized companies (the average for Europe companies is CHF 2.7 million).

Price Waterhouse Coopers, the largest auditing firm, published its study on economic criminality. They surveyed 5400 companies based in 40 different countries and across 16 economic sectors. The Swiss study comprised 84 surveyed companies.

Among the typical crimes are embezzlement (22% of the cases in Switzerland), falsifying balance sheets (4%), corruption (5%), money-laundering (8%), and counterfeiting (15%).

The surprising thing is that 43% of companies surveyed claimed to have had an incident within the past 2 years. In Switzerland 37% of responding companies were victims of fraud.

The study’s authors note that while the incident rates have not changed much over many years despite improvements in corporate controlling and surveillance, the willingness of company management to file complaints has increased markedly. More than half of the currently surveyed cases of employee misdemeanors were discovered via informers within the respective companies.

Price Waterhouse Coopers notes that more than the financial damages inflicted, companies suffer from the damage to their image, to their brand,, or to the motivation of their employees, which can damage a company for the long term.

Among the characteristics of the profile of the employee who turns to criminal activity against his company are a low resistance to temptation and a high degree of frustration at work.

Among the preventive measures recommended by the auditors are reinforcement of the corporate culture, ethical directives, and a strict code of conduct. The study revealed that the most effective means for fighting against employee criminal conduct is the existence of a strong company culture firmly entrenched in the management.

Switzerland’s economy is particulary dependent on the financial services sector, the pharmaceutical and chemicals sector, the luxury watch sector, and other technology sectors.

Growth in each of these sectors (except perhaps chemicals and pharmaceuticals) have recently put enormous pressure on the Swiss job market for qualified candidates in a wide variety of fields and skill sets.

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