The fact that a company is affected by fraud is already a problem, but it is sometimes made worse when the fraud also causes reputational damage. Fraud quickly destroys trust, causing investors and customers to turn away from the company. A major fraud case can have serious consequences for a company's reputation and financial stability.
Fraud is bad, but damage to reputation is even worse
A (fictitious) example:
A technical installation company operating both inside and outside the Benelux is implicated in a fraud scandal involving a foreign subsidiary. As part of a major construction project in Eastern Europe, orders were falsified (by its own employees and external suppliers working in concert) and false financial reports were submitted. This gives the impression that everything is going well. In reality, the progress of the project is a tragedy. Those involved have tried to conceal this reality by submitting false reports in the hope that things will gradually improve.
This fraud case seriously damaged the installation company. Investors, banks and customers pulled out, leading to major financial problems. Ultimately, the case led to the company's bankruptcy.
It is clear that the company's internal controls failed, even though the fraud was strongly linked to external parties such as contractors, suppliers and financial partners who put pressure on the subsidiary's management to provide false data.
How can this situation be avoided?
Annual fraud survey
Every year, Allianz Trade carries out a fraud survey in the Netherlands and Belgium. It highlights the different forms of fraud, the damage suffered by companies and the measures taken. Taken together, this gives a picture of the resistance and vulnerability of companies.
In particular, the survey shows that a large majority (57%) of companies faced with fraud do not report it to the police. It also shows that a third of all cases of fraud in the Netherlands are dealt with internally (no external experts are called in). Many companies prefer to keep fraud 'in-house' to avoid negative attention.
How can you protect your business?
Of course, it makes sense to take solid preventive measures (see the section on our prevention tips). But even so, the risk of fraud remains and so does the potential damage to reputation. To prevent your business from suffering significant damage, Allianz Trade offers fraud insurance that can be tailored to each type of business. The insurance also covers damage to reputation.
What does Allianz Trade's fraud insurance offer?
With our fraud insurance, you limit the financial damage caused by fraud (not only internal fraud, but also external fraud). We compensate you for most of the stolen money, the value of the stolen goods and additional fraud-related costs, such as legal fees. With our fraud insurance, you protect your business not only against financial loss, but also against damage to systems and your reputation. What's more, you can count on expert advice to help you avoid fraud.