Financial institutions carry a lot of risk. While a lot of institutions focus heavily on external risk, it is critical to monitor and protect against internal threats. No one wants to think that employees may compromise the institution, steal or commit fraud in the company’s name. Unfortunately, employees can also become a risk that the institution needs to prepare for. Financial institutions can invest in financial institution bond coverage.
The Importance of Financial Institution Bonds
A financial institution bond is a type of business insurance that protects a company by covering losses associated with:
- Fraudulent trading
When an employee acts dishonestly for personal gain, he or she can harm the financial institution. The bank, finance company or any other financial business could face devastating losses or damage to their reputation.
Most Common Financial Bond Claims
Given that all financial institutions have a digital presence, one of the most common claims is due to fraud via fund transfers. Institutions need to be diligent in protection outside of financial bond insurance too. For instance, if a company does not follow protocol, a claim may be denied.
Internal threats should always be a consideration for financial institutions. Without insurance coverage, the effects of theft, fraud or embezzlement can devastate a company.