Employees seeking to maintain their affluent lifestyles are increasingly turning to defrauding their employers, and the length of the recession and slow pace of growth is escalating the risk of this type of insider fraud, according to specialist fraud lawyer, Mark Kenkre, a partner at Midlands firm Challinors.

"Economic commentators are now telling us the economy is limping towards recovery, but are consistent in their assessment that recovery will be slow and we are not out of the woods yet," says Mark, joint head of the Fraud & Asset Recovery Department at Challinors. 

"This slow growth, coupled with the deep recession has caused employees to perpetrate frauds against their employers as they seek to maintain the lifestyles they enjoyed prior to the recession. The length of the recession and the slow pace of growth have increased the risk of employee fraud."

Challinors' Fraud Survey, published earlier this year, revealed that surprisingly only 28 percent of businesses surveyed are worried about their business being affected by fraud. "Interestingly, of the businesses surveyed, 37 percent felt the area they were likely to be affected would be by internal fraud by their employees. However, and perhaps most worryingly, more than a third of these businesses do not have any systems in place to detect fraud and 47 percent do not invest in training staff on how to spot fraud," he says.

A recent report by the UK's Fraud Prevention Service, CIFAS confirmed that fraud carried out by employees is on the increase. "The findings show that dishonest actions by staff to obtain benefits by theft and deception in the first half of 2009 increased by 69 percent on the second half of 2008, while the number of women being identified as staff fraudsters during the first half of 2009, more than doubled when compared with the second half of last year.

"All sectors have been targeted as employees seek to sustain the lifestyles they enjoyed when the good times were with us. Whilst everyone is at last realising the need to combat this area of fraud, the finance and insurance sectors have been particularly targeted by employees and are consequently suffering major losses, both in terms of a hit to the bottom line, and the business' reputation.

"Not only must employers learn to recognise the key warning signs and danger areas of insider fraud for businesses in these sectors, but they also need systems in place to detect and investigate incidents and implement an appropriate incident response," comments Mark.

"The CIFAS survey revealed that in the first half of 2009, two in five of frauds were identified through internal processes and audit procedures, which highlight the importance of having the correct internal systems in place to increase the chance of the employee being identified before the effects of the fraud are too great on the business. Employers are now making a conscientious effort to protect themselves and there are better tools and services available for us to assist them in their fight against fraud. A more recent trend is to consider continuously screening employees, and retrospectively screening employees who weren't adequately checked when they joined. 

"Implemented and managed properly, workplaces can become less vulnerable. However, if the employee slips through the net or these practices are not employed, we are well placed to recover the monies taken from the employer via the Court process."

Challinors' Fraud & Asset Recovery Department will examine how to identify and protect against the inventive tactics used by employees in insider fraud at the third in its series of Breakfast briefings at Hotel du Vin, Birmingham, on Thursday 12th November 2009.

The event's guest speaker is Andrew Whittaker Head of Counter Fraud Training at Teceris, the corporate and complex loss adjusting and claims management organisation. An Accredited Counter Fraud Trainer, Accredited Counter Fraud Specialist and an Accredited Security Management Specialist, Andrew worked for the NHS Counter Fraud and Security Management Service as Deputy Director of Training Skills for seven years. He has over 30 years experience of countering fraud, both operationally and in a training environment. For more information and to reserve a place at the event, visit: http://fraud.challinors.co.uk.