You’ve worked tirelessly to build your business, carefully assembling a team you trust. However, even the most successful companies face an unsettling reality—the risk and the impact of employee fraud. Occupational fraud costs businesses up to 5% of annual revenue, with $3.1B lost to fraud in 2024. Here, we discuss practical strategies for detecting and preventing employee fraud. We look at various types of fraud, red flags to watch for, and prevention tactics to protect your business.

Keeping money and ideas safe from outsiders is relatively easy. But what happens when you have to keep them safe from insiders? Asset misappropriation is a type of fraud that employees commit in their organizations, usually taking advantage of their position. This makes it not only harder to prevent but also difficult to identify if you don’t have the right systems in place.

The business world continues to move to a knowledge-worker-based economy. Companies derive less and less value from widgets and more from the processes, ideas, and innovations they create — their intellectual property (IP). But IP needs to be protected. IP theft is the appropriation of unique ideas, inventions, or theft of trade secrets, usually by malicious insiders.

Employee fraud is not just a rare occurrence, but a prevalent issue in the American workplace. Shockingly, three out of four employees have confessed to stealing from their workplace at least once for personal gain. The types of fraud are diverse, ranging from petty theft to complex schemes involving benefits, accounts receivable fraud, or intellectual property. The risk of employee fraud affects both small and large businesses.

Intellectual property (IP) is the intangible property belonging to a company, such as its designs, creative expressions, inventions, or trade secrets. Intellectual property theft leads to serious financial damage for a company, including decreased business growth and loss of competitive edge. Sometimes, companies aren’t even aware that their IP has been stolen, making tracking IP theft difficult. Even though it’s a federal crime, only a small percentage of all IP theft cases are reported.