Trust and loyalty are desirable traits in family structures and in business; however, these traits can also leave a family business vulnerable.
In fact, family businesses are especially vulnerable to fraud, according to the Association of Certified Fraud Examiners' (ACFE) 2016 Global Fraud Study. The study found that businesses with fewer than 100 employees, which are in many cases family-owned, experience fraud at a rate of 28.8%, compared to the 19.8% experienced by those with more than 10,000 employees.
In a family business, trust and security often have an inverse relationship, meaning as trust increases in a business, the quality of internal controls and security is minimized. Business relationships — particularly among family members — can become strained when individuals believe they are owed more money or authority than they receive.
Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader
Your access to unlimited PropertyCasualty360 content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking insurance news and analysis, on-site and via our newsletters and custom alerts
- Weekly Insurance Speak podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the employee benefits and financial advisory markets on our other ALM sites, BenefitsPRO and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
