Crime Insurance for Banks and Those in Finance
Financial institutions have a lot to worry about when it comes to their risks and liabilities. While most businesses are able to retain an insurance policy as a defense against these liabilities, a bank, lender, and other company operating within the finance industry is protected through sector-specific liabilities with a financial institution bond. This is a form of insurance that protects the institution from things like employee theft or computer fraud.
The Rise in Employee Dishonesty
In spite of sound hiring practices and accountability measures, employees can never be fully trusted, especially where it concerns money. It is estimated that employers lose almost 6% of their annual revenue to employee forgery, computer fraud, or outright theft. Financial institutions have greater exposure in these areas because of the continual interaction with customer accounts and funds transfers.
The Threat From Outside
In addition to internal threats, financial institutions can be exposed to monies or securities fraud, extortion, or in some cases, kidnap and ransom of important employees. As these acts and those that occur from within are often criminal in nature, a financial bond protects against the loss of funds the institution may encounter as a result of the event.
Bonds are often a regulatory requirement for financial institutions. These are a key way to protect an institution from internal or external threats and loss.