5 Mistakes that Elevate Risk in Your Business

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5 Mistakes that Elevate Risk in Your Business

When you’re the head of a small or middle sized business, you have a dozen hats to wear and never enough time to take care of everything. These 5 mistakes that elevate risk in your business can be avoided.  Learn these 5 tips and keep your company, employees, partner and clients safe.

It’s inevitable that some things will slip through the cracks.

1) Not Conducting Background Checks

 

To some people, this may seem obvious.

Before you bring someone on-board, make sure they are who they say they are.

Unfortunately, there are a staggering amount of employers who think that they don’t need to run a background check. They liked the person who showed up at the interview and will hire them without hesitation.

How could this possibly be dangerous?

Conducting a background check gives insight into the applicant’s behavior and patterns.

We had a client that hired a nice young woman based on her experience as a CPA. Come tax season, she stole the social security numbers of all the employees. Then she used them to commit tax fraud and collect their returns.

When our client ran a background on her, they found several counts of theft, harassment and arson.

Even if there aren’t any white collar crimes to report, there might be other things lurking in the shadows.

A DUI, for example, is no laughing matter.

Having a charge on your record displays a pretension for irresponsibility. If they’re not wise enough to not drink and drive, how do you think they’ll act within your company?

What about assault and battery charges?

During the interview, the prospective employee might seem charming and be a perfect fit. Then you find out, a month or two down the line, that they have problems handling their anger. They could potentially take out their issues on your employees.

People like that have a record of patterned behavior.

Solution: Check out their background before giving them a job offer. You might be surprised by what you find.

 

2) Blind Trust with your IT Personnel

Since we are in the digital age, most everything a business does occurs over the web.

You’ve put the necessary precautions in place – installing anti-virus software on your main computer and hired an IT staff to handle everything else.

You’re set, right?

Not necessarily.

Just because you’re working with an IT company doesn’t mean they automatically know how to protect your business.

A good IT firm will have recommendations about security protocols to put into place as soon as you sign up with them. These protocols that protect you, your employees, your customers and your vendors from having their information stolen or corrupted.

Unfortunately, just putting the protocols into place doesn’t inherently stop the bad guys from getting into the system.

Security measures have to constantly be updated, monitored and tested in order to really protect you.

An anti-virus program from 2010 will not stand a chance against a virus or malware software from 2016.

You have to remember that a cyber-attack is always around the corner and can happen anytime, anywhere and to any company.

Just ask Target, Sony, GoDaddy, Staples, Anthem Insurance, and Experian about cyber crime.

These are big name companies with a lot of money to put into cyber defense. Yet, they were hit hard and suffered massively when attacked.

If these massive corporations can be knocked down by a hacker, it would be even easier for a small business to be broken into.

Solution: Ask your IT people what they’re doing to protect you and your company from these threats.

 

3) Lack of Education About Workers’ Compensation


One of the banes of owning a business is when an employee gets injured on the clock.

According to the US Department of Labor, every year in California, 9,000 to 11,000 employees file for workers comp.

In 2015, this amounted to $438,000,000 in compensation and medical bills paid for by business owners.

The odds of encountering a claim skyrocket if you operate any type of business that deals with heavy machinery, transportation and construction.

In order to protect yourself and properly care for your employees, education is key.

They need to know what to do if they are injured and you need to make sure everything is filed correctly. A workers’ comp claim can take years to settle or close.

The only way to speed up the process is to be as compliant as possible. Make sure that the employee fills out the right paperwork and  is seeking out medical attention.

If you suspect fraud, however, talk with your business insurance provider. They will probably send out an investigator to look into it. Depending on what you find, the claim might continue or be closed based on the evidence.

Still, you don’t want to have to rely on catching the employee somewhere down the line.

Educate your employees on the consequences they face if they file a fraudulent claim.
Solution: Take every workers’ comp claim seriously and make sure your employees know how a claim can affect the overall bottom line.

 

4) Failure to Preserve Electronically Stored Information (ESI)


Not only do you have to worry about threats from the outside world, but also inside your own company.

Imagine this scenario: You’ve have a poorly performing employee who needs to be cut from payroll. They’re enraged and can’t believe you’re firing them.

They leave and you continue finding someone to replace them.

Unbeknownst to you, the employee can access work email and other cloud services via their personal cellphone. And even though the employee is no longer at the office, they can still get their hands on sensitive information.

Because you don’t know they have this access, you turn over their computer to the employee who replaces them.

Now, let’s say that the former employee wants to trade the information they have about your company with your competitor so they can get a new job.

You find out about this later and file a lawsuit against the former employee for corporate espionage.

During the course of the lawsuit, you need to prove the former employee’s guilt because the information they gave to the competitor was only on their computer.

You might find this difficult to prove, because the new employee has the computer with all the information on it.

Unknowingly, you just ruined your case. Or, at the very least, jeopardized your chances of winning.

By not immediately locking out the terminated employee from all access to the company, you’ve exposed yourself to risk.

Solution: Preserving electronic data is really as simple as swapping out an old hard drive for a new one.

The next step is to change passwords on email addresses and other places of logging in. This creates a barricade that, while not impenetrable, can help protect you from harm.

 

5) Not Really Knowing Your Supply Chain


Any time you bring in a third party to support your business, you’re putting yourself at risk.

Once you expand your business outside of the corporate office, you’re putting the fate of your company into others’ hands.

Sometimes, you find out after the fact that the people you do business with aren’t as reliable as they seem.

Take a look at these causes and effects that impact business owners’ every day.

Delays in Production:

Cause: Unstable suppliers who can’t meet your needs

They could be too slow at producing the final product or they’re not checking the product as it passes through various layers of production. This can lead to a defected product at the end, needing to be thrown away and start over.

Effect: Upsets purchasing managers, distributors and customers. Lag time on deliveries causes delays in revenues.

Solution: Work with the manufacturer to make sure the best processes are in place to make the product.

Keep an open flow of communication so they let you know when they run out of material or have broken machinery.

Delays can happen. Knowing about them as they arise gives you breathing room to plan around them.

Counterfeiting & Diversion:

Cause: Rogue distributors & manufacturers exploit your IP & Brand.

Effect: Upsets authorized distributors and consumers leading to brand erosion, customer confusion and loss of profits.

Solution: Conduct frequent audits on your manufacturers. If they aren’t compliant, don’t work with them.

IP & Trade Secret Leaks

Cause: Failure to protect your tangible and intangible IP.

Just because your office is secure doesn’t mean your manufacturer’s office is. Their computer systems can be broken into and your company information could be leaked to a competitor or counterfeiter.

Effect: Patent designs and secure information can get into the hands of counterfeiters. They can distribute low-quality products that look just like yours.

Solution: Ensure your manufacturers have up-to-date security protocols in place. Encourage them to work with an IT company that can protect their business from attack.

 

Hopefully this helped you understand how protect yourself internally, in the cyber world, and from white collar sharks.

If you put up the right defenses, it will show others that you’re serious about your business. It will show hackers that you’re not one to mess with and to go pick on someone else.

But most of all, put the right procedures in place so you can focus on what matters: expansion, revenue, and being the best in your industry.

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Workers’ Comp Surveillance is Necessary Today

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Workers Comp Surveillance

It would be great if you could trust people more fully, but the fact of the matter is you cannot, especially if they are filing for workers’ compensation. You would be surprised what good workers’ comp surveillance can turn up. Don’t get swindled; get an investigator to make sure that the injuries are legitimate and not a fabrication.

Who Hires Workers’ Comp Investigators?

Most of the time it is the insurance companies themselves that will hire investigators. Since they are the ones who will have to pay the claim, insurance companies are very keen on avoiding being defrauded. They cannot afford to pay claims that are not real and stay in business for long.

Corporate enterprises also hire investigators to look into workers’ comp claims too. Injuries on the job leave the employer liable in certain cases, and the last thing they want to do is pay for an injury that is not real. It is also good for a company to know if an employee is that devious as to lie about an injury to attempt to defraud them.

Finally, defense attorneys also commonly hire investigators to dig into injury claims. The goal is to limit their own liability and expose fraud.

The Investigators

Not all evidence is admissible, so it is important to make sure that you are hiring investigators that have experience and know how to gather solid, admissible information and evidence. The worst thing that could happen is that you find out that a workers’ comp claim is fraudulent, but cannot rectify the situation because the evidence gathered was not admissible.

Contact us to learn more about this service offering and the other services we provide.

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Fighting insurance fraud with private investigation

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Fighting insurance fraud with private investigation

Insurance FraudFighting insurance fraud with private investigation

There are many domains of application for private investigation. In each one of them, private investigators are hired to shed light on matters arousing suspicions from at least one party. This article is written from the perspective of insurance companies and explains how private investigation can be used to fight insurance fraud.

How Fraud Occurs

Because fraud is a rampant problem in our society, insurance firms need to protect themselves against policyholders who are always trying to gain access to the benefits to which they aren’t normally entitled. For instance, if a policyholder is covered for a list of accidents related to work but contracts an injury while at home, then they may try to file a fraudulent claim to avoid spending their own money. Another example is when an insured person exaggerates on an injury report to maximize their insurance benefits.

Deterring fraud

As you might know, insurance claims must be submitted along with several documents substantiating the financial request of the policyholder. For example, after a work-related injury the employee will undergo medical examinations and use the reports generated to submit a claim to their insurer. Once the claim has been submitted, the insurer will review it and assess its legitimacy. What may raise suspicions on the claim is the amount requested, especially if it seems to be disproportionate compared to the injury itself. This is usually going to trigger a private investigation, and ultimately the filing of a lawsuit by the insurer’s attorney.

Investigating the claim

The goal of the private investigation will be to gather evidence strengthening the suspicion that the claim is fraudulent. The private investigator will have at their disposal a number of tools to complete their mission such as placing the claimant under surveillance. For example, if the policyholder claimed that their injury prevents them from performing any kind of physical activity but is spotted lifting objects in their backyard, the investigator will know that the claim is a scheme.

Get legal assistance

Fraudulent claims are considered crimes nationwide. This means that there are specific legal sanctions for those who are found guilty of such schemes. Every time that a fraudulent claim is uncovered, the insurer needs to contact a lawyer who will make sure that the fraudster gets punished to the fullest extent of the law.

If you’re an insurer and believe that you’re being victim of fraud, please contact us today and we’ll help you prepare a solid fraud investigation case.

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ISO Searches, the First Step in Assessing a Claim

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Before you can assess the validity of a claim and determine if there are any red flags it is important to have a profile on your claimant or subject.  The first thing to search would be ISO for any and all claims, litigated or otherwise.  The EDEX search would show you litigated claims, but you could be missing the big picture if you don’t search the ISO database.

We can help you search for ISO to locate prior claims.

  • Auto accidents claims can be searched by name, plate or VIN.
  • Property Claims can by search by name or address.
  • Workers’ Compensation Claims, can be search by name or by business.

Additional Reading:

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6 Red Flags – Workers’ Comp Fraud

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6redflags of workers comp

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Surveillance…for what?

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The use of surveillance as a strategy is something that attorneys, insurance companies, brand owners and businesses are utilizing to develop crucial evidence & information.

Here are some example of how you might utilize surveillance:

  • Insurance Fraud / Workers’ Compensation (Determine employee’s activity level)
  • Premises Liability (Buildings, Offices, Construction Sites)
  • Asset Searches / Judgment Recovery (Employment, Businesses, Banks)
  • Job Site Monitoring (Misstatement of Time/Labor, Materials theft, Accidents)
  • Trade Secrets Theft
  • Non-Compete Violations
  • Competitive Intelligence (Raw Material Shipments, Finished Product, Staffing, Operations)
  • Political Intelligence (Discreet meetings, Alliances, Background)
  • Improper use of company time (FMLA, Workers’ Compensation)
  • Environmental Issues
  • Auto Accidents (Cross-walks, Lighting, Traffic Light Timing)
  • Threat Detection / Mitigation
  • Improper use of residential or commercial property
  • Trademark Infringement / Counterfeiting

In order to obtain the information and evidence that you need engage with a licensed and experienced private investigator who conducts surveillance on regular basis.  A trusted investigator will maintain current equipment, utilize a discreet surveillance vehicle and be able to conduct the surveillance investigation without being made or burned.  We also suggest that any invoices, reports, case notes or communications regarding your surveillance investigations should be directed toward your attorney to keep the information privileged and confidential.

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Why would You conduct Workplace Investigations?

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Workplace Investigations- Why?

Workplace violence, sexual harassment, Worker’s Compensation claims, theft (Intellectual Property, Internal, External), discrimination and data breaches can dramatically impact corporate culture and reputation; not to mention revenues.

A professional, trained, investigator that is experienced can provide your company and counsel with objective information you need to make crucial business decisions. Workplace investigations may include conducting interviews of any witnesses and involved parties.  Background checks on adverse parties and witnesses can prove to be useful to develop crimes of moral turpitude that can impact the credibility of their testimony.

Upon notice of Workers’ Compensation claims an employer should move quickly to secure statements from the injured worker, witnesses, and preserve any evidence (video/photographs).  If there is suspicions that an employee who was allegedly injured in the course and scope of employment and is collecting Workers’ Compensation benefits is believed to be working elsewhere or is conducting activities that are above and beyond their restrictions then conducting an activity check and or surveillance should be pursued.

When the decision is made to terminate an employee keep in mind that the situation could turn hostile.  According to OSHA statistics taken in 2012 over 2 million employees have reported being victims of workplace violence.  Steps should be taken to secure the employers facility via security personnel and the employee could be covertly followed to insure that he/ does not return to the employer’s location and cause a stressful and potentially threatening situation.

According to a study published by the Society for Human Resource Management workplace violence can cause the following issues in organizations;

  • A decrease in morale (29{2f3748b5ca5ab0ef62f1154c571df9c56b0d52fa28ba96fa4f869e5919b9e929})
  • A perceived decrease in safety (28{2f3748b5ca5ab0ef62f1154c571df9c56b0d52fa28ba96fa4f869e5919b9e929})
  • Less trust in coworkers (28{2f3748b5ca5ab0ef62f1154c571df9c56b0d52fa28ba96fa4f869e5919b9e929})
  • Increased levels of stress and depression among workers (24{2f3748b5ca5ab0ef62f1154c571df9c56b0d52fa28ba96fa4f869e5919b9e929})

Companies can mitigate workplace issues by conducting, diligent, pre-employment background checks on their employees, applicants, vendors & partners.

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Workers’ Comp- What is it costing you?

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Insurance costs rising? Corporate culture affected? Frustration? Decrease in production? Increased training costs?

These days as we meet with clients we seem to always hit a hot button when we get on the topic of Workers’ Compensation. The rising cost of Workers’ Compensation Insurance really impacts small businesses.

The main frustration that our clients have is that so many claims are filed and the insurance company would rather settle the claims than aggressively fight them off. Companies want to send a message to their employees that Workers’ Compensation claims that are fraudulent will not be tolerated. A settlement check from the insurance company sends a contrary message. We encourage clients to work in cooperation with their insurance carrier and investigator to develop the evidence required to defend claims.

Workers’ Compensation claims drastically impact a businesses ability to provide raises to employees, improve systems and keep them profitable.

We find that it is important to constantly remind employees of the negative effects of filing fraudulent Workers’ Compensation Claims. In fact employers often bring us in to present to their employees about the effects of Workers’ Compensation claims on the business. Additionally, during our presentations the employees are reminded that their employer will be thoroughly investigating all claims. We also recommend that employers conduct thorough pre-employment background checks on prospective and current employees.

What investigative services can be utilized to stop Workers’ Compensation fraud? This is a great question with a complex answer. First and foremost we would recommend that all employers make their employees aware of the need to report any and all claims immediately. We also recommend that personnel files are kept up to date in the event that a post-claim investigation is required. The most useful information in a personnel file to HR professionals, claims examiners and investigators are; current photographs, drivers’ license number, emergency contact person, updated address, job descriptions and training certificates.

Interviews/Statements- Commonly referred to as AOE/COE investigations can be conducted at the first notice of any injury/claim to obtain information from witnesses and the injured employee regarding the injury. This is a great way to document the specifics and let the employee know that injuries/accidents are treated seriously. Additionally information obtained in the AOE/COE investigation can be used later on should evidence of fraud come up.

Activity Checks– Discreet field investigations to determine the employees activity level. These checks involves checks can involve discreet interviews with neighbors to determine the employees activity level and determine if the subject is employed.

Surveillance– Discreet field surveillance can be conducted to obtained video recorded evidence of the injured workers activity level, evidence of employment and or evidence of actual injury.

Subrogation (Third Party Liability)- Investigation aimed at determining if a third party has any exposure to the liability. This type of investigation is very common when the injury was caused by machinery or equipment that is not owned or maintained by the employer.

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