The problem of employee theft also cuts across all types of industries. The 2015 Hiscox Embezzlement Watch List: A Snapshot of Employee Theft in the U.S. found that real estate and construction came in as the second-most common industry for cases of employee fraud, constituting 13 percent of the active embezzlement cases with a median loss of $300,000. Retail was the industry with the highest median loss at $606,012, although these thefts only accounted for 5 percent of the sample.

The report also found that municipalities, which comprise 10 percent of active cases in the U.S. court system, were particularly susceptible to check fraud. Fraudulent checks were involved in half of the municipal fraud schemes with a median loss of approximately $422,000. Even more alarming is that 63 percent of those who committed fraud against municipalities held management positions.

Gender dynamics of theft vary between certain industries, but women generally have a higher rate of fraud, perpetrating 82 percent of the cases in the health care industry with a median loss of $446,000. Women also accounted for 90 percent of the frauds in the professional services industry with an average loss of $235,000.

Amazingly, 19 percent of the losses were greater than $1 million, while the average loss was $842,403 and the median loss $280,000. Smaller schemes are far more prevalent, but a $200,000 or $300,000 loss could be devastating to a small business.

Never thought it could happen to us

Trusting employers can be complacent about instituting the types of measures that can easily detect many employee thefts. A look at some recent closed embezzlement claims shows how employees in different industries were stealing from their organizations in barely concealed schemes.

Very polished. A distributer of nail and cosmetology products found indicators of theft in electronic messages on company computers. After interviewing employees, an ongoing theft was uncovered. Pallets containing cases of nail polish and other items were prepared for delivery and then picked up by an outside truck. The thief sold the products at local nail salons, to friends, and even to people on the street and got away with more than $500,000.

Just for the sport of it. A sportswear store employee stole $42,000 by re-directing all COD orders to his own pockets. After COD orders were picked up and signed for by the customers, the employee altered entries in the computer system to make it look as if the order had been cancelled and kept the cash. It was obvious once the owner realized this employee was not only working every time an order was “cancelled,” but he was also the only one with access to both the cash and the computer during those shifts.

King of the trailer park. An employee slowly stole more than $26,000 from an RV park by stealing a little bit of cash every day and then changing the daily deposit slips to the new, lower number. A $100 shortage was discovered accidentally when a new employee noticed that there was an erased number for the amount of cash to be deposited on the ledger. The fraudulent employee had been stealing small sums of money for three years before getting caught since all of the entries were in his handwriting.

Can't buy me love. A company's controller had been writing checks to himself and cashing them to the tune of about $45,000. The controller also wrote checks to a “romantic interest” for an additional $33,000. All of the checks were pre-signed by the company's chief financial officer for emergencies only. The controller would cash the checks and then “enter” them into the company's QuickBooks accounting system and later either delete the entry or assign it to a legitimate vendor.

Detection: The First Line of Defense

While it is nearly impossible to completely prevent employee theft, the best way to limit any losses is to detect them quickly. Here are some best practices companies can adopt to reduce the risk.

Keep Your Eyes on the Gatekeeper

Accounting managers, finance directors and controllers are frequent perpetrators of employee theft. High-level employees are often able to continue their schemes for many years, setting up systems that conceal their deception. This often happens because of the level of respect they have within the organization. Not many accounting clerks will question the way a CFO wants a process handled, even if it could mean the CFO is embezzling from the company.

Establish controls in the accounting department

Require two signatures on checks. Do not allow one person to have control over any function from start to finish. Do not let the person who has responsibility for accounts payable reconcile the bank statements. Small-business owners should consider having bank statements sent to their homes rather than the business so they can review them before they can be altered.

Talk about it

Many companies recognize that trust goes both ways and are afraid that talking about embezzlement will cause them to lose their employees' trust. In reality, people who steal from their employers are looking for organizations with an attitude of blind trust and honest people won't turn into criminals because the subject comes up.

Act swiftly and decisively

Once a company knows that an employee has been stealing, act quickly. If the company's law firm does not have expertise in embezzlement, find one that does. An experienced firm will be able to recommend a forensic accountant to determine the extent of the theft.

Mitigate the risk

The prevalence of employee theft is significant and very surprising to most people. Many business owners and executives never consider insuring against it, but it is a very real risk and often difficult to detect before it happens. Keep in mind that most liability insurance policies do not cover employee theft, but separate crime policies or embezzlement riders are available.

Douglas Karpp is senior vice president and national underwriting leader for crime and fidelity in Hiscox's Los Angeles office.