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Why Would a Small Business need an Investigator?

May 29, 2019

The core mission of Overwatch Risk Solutions is to protect the things important to you. Besides the various security disciplines among our pool of experts, we also provide various investigative solutions to protect people and businesses alike. An experienced, properly licensed investigator can help protect your assets, your employees, and your business’ future.

 

Due Diligence

 

The Cambridge dictionary defines due diligence as, “an action that is considered reasonable for people to be expected to take in order to keep themselves or others and their property safe. ​

. . . the detailed examination of a company and its financial records, done before becoming involved in a business arrangement.” Simply put, due diligence is an analysis of either a person or a business to determine credibility and reliability in a transaction.

 

Is the contractor you are considering hiring to repair your storm damage reputable or do they have a history of complaints and claims against them? After Hurricane Michael devastated the Florida panhandle, the area was flooded with inscrutable so-called contractors who took down advance payments for supplies to perform work and then just disappeared.

 

What is the background and track record for that new supplier you are considering using? Your business may be dependent on your vendors and suppliers to provide high quality products on time. It may be wise to see if you’re your suppliers can actually deliver what they promise.

 

Sometimes new investment opportunities or new potential partners come your way. Isn’t it worth a small investment to make sure that these great opportunities are coming from reputable people and organizations?

 

To summarize, if you are investing your money in a business transaction, a due diligence investigation can help you make an informed decision.

 

Theft, Embezzlement, and Fraud

 

According to the Association of Certified Fraud Examiners (ACFE) 2018 Global Study on Occupational Fraud and Abuse, small businesses with less than 100 employees lost, on average, almost twice as much per fraud scheme ($200,000 per fraud scheme) compared to companies with more than 100 employees ($104,000 per scheme). The same report concluded that half the fraud against businesses were due to inadequate internal controls.  (If you would like to read ACFE’s report in its entirety, it is available at https://s3-us-west-2.amazonaws.com/acfepublic/2018-report-to-the-nations.pdf.)

 

Employees who decide to steal from their employers can do so in many ways. Outright theft of cash, theft of company property, skimming, creating and processing payments to fictitious vendor accounts, refund schemes, personal purchases on the company’s credit card, and check tampering are just a few of the ways employees can steal from their employer.

 

An experienced investigator can help identify gaps in a business’ internal controls and potentially identify schemes already in progress.

 

Sexual Harassment and Employee Misconduct

 

Large corporations are not the only entities that may benefit from an internal investigation. In fact, small businesses are just as susceptible to legal liability and can profit from taking steps to mitigate their risk. Relationships among employees who work for small businesses can sometimes be far less formal than in large corporations. The misconduct of one employee potentially means liability for the company as whole. An independent, professional internal investigation gives businesses the chance to assess the level of risk and assemble the necessary facts to help determine appropriate action. When it comes to complaints of harassment or misconduct against employees and management, the worst thing any employer can do is nothing.

 

Undercover Investigations

 

There may be times when a business may want to employ an investigator to conduct either a covert surveillance of employee activity or simply pose as a customer, potential client, or an existing or potential vendor. These tactics are typically used if an employer has concerns about how employees conduct themselves.

 

One example is a small retailer who noticed a significant decrease in sales during a certain period of time during the day. By using an investigator to conduct surveillance on the business during the time frame in question and also pose as a customer, it was discovered that two employees were skimming from the register by not ringing up sales properly. It was also determined that the same employees were offering cash “discounts” to customers who would agree to pay in cash without the “sale” being rung into the register and giving away merchandise to friends.

 

These activities may have gone undiscovered had a skilled investigator not been utilized.

 

 

Risk Assessment

 

A seasoned investigator, particularly one adept at conducting risk assessments, can assist small businesses with being proactive in identifying potential vulnerabilities in daily business operations as well as identify potential toxic workplace culture issues that could lead to future sexual harassment complaints, workplace violence incidents, or offenses against the business by disgruntled employees.

 

A skilled practitioner utilizes various tools to complete four generally accepted parts of a thorough risk assessment: identify potential risks and hazards, determine who/what could be harmed and how that harm could occur evaluate the risks and identify mitigation measures, and document findings and assist in implementing corrective action. This is done through analysis of business practices; assessing the business’ security posture; observation of business operations and employee interaction; and interviews with owners and/or senior management, employees and other key personnel.

 

If you would like to learn more about how a licensed investigator can help you in your business, reach out to us at (850) 629-9677 or contact@overwatchrisk.com.

 

 

 

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