Risk Management


How Much Could Negligence or Lack of Due Diligence Cost a Business ?

The average settlement awarded in security related negligence cases has risen to $1 million. Criminal records screening, drug screening, credit review, employment, and education verification can be the building blocks that allow employers to manage their risks.

Criminal Records

Who is an employer hiring? What does a criminal look like? The U.S Department of Commerce found that 30% of small business failures were a result of internal theft. They also found that 17% of crimes occur in the workplace. In today's society one can never be certain of the actions or intentions of other people.

Unfortunately, Convictions is not a popular heading on today's resumes. An employment background check can give an employer insight into how an applicant will handle situations as they arise in their work environment. The results can also help an employer make an educated decision as to whether an applicant is the right person for a specific job. Reviewing criminal history utilizing pre-employment screening lets the employer decide if an applicant has any history that might suggest they are not the right person for a specific job function, such as, handling sensitive information or handling finances for the business.

A criminal background check cannot give an employer all of the information that they need to manage their risk when hiring employees, however, it is one piece that can help put together the puzzle that can be an applicant.

B4 screening Drug Screening

Another piece to the risk management puzzle is Drug Screening. A 2010 report from Quest diagnostics showed that 8%-11% of employees were current illicit drug users. It has also been found that 3 out of 4 illicit drug abusers are employed. What kind of risk does this create for an employer?

Industry figures show that abusers are a safety threat both inside and outside of the workplace. Their activities make them prone to accident and errors which can drive up the likelihood of workers compensation claims. Surveys have shown that almost 1/3 of employees say that working with co-workers who are affected by drug and alcohol abuse decreases their productivity. This ripple effect from one employee can cripple an entire business.

Drivers are another huge concern when businesses consider drug screening. Both professional and non-professional drivers increase risk for an employer. In 2007, the Oregon State police studied results of randomly selected truck drivers and found that almost 10% of drivers tested positive for illicit drugs. Professional drivers are not the only concern for today's businesses. Non-professional drivers operating a company vehicle increase the risk that an employer takes on, as well. In 2010 the National Highway Traffic Safety Administration reported that 18% of fatally injured drivers tested positive for illicit drugs.

Pre-employment drug screening is an integral piece of the hiring puzzle and can help any business manage the risk they are taking on while hiring new employees.

Credit Review

Credit review is no longer just for the financial industries. Why do mortgage lenders and banks require credit checks? All of the information found in a credit report can help an employer asses the risk of bringing on an applicant. Job function weighs heavily in the decision making process when reviewing a credit report. Do you want a finance manager that has shown a history of being unable to manage their personal finances?

A credit review can give an employer a historical view of decision making and personal responsibility of a perspective applicant. The associated press states that as of 2010 over 11% credit accounts were in default. What does this mean to an employer? Dire times call for dire measures. We would all love to trust everyone that we come in contact with but the days of leaving your front door unlocked have gone away. The NY Times estimates that 72% of shrinkage is driven by employee theft.

A credit review helps an employer continue to piece together what they can expect from an applicant by seeing their credit history and gives some insight into their value of personal responsibility.

Education and Employment Verification

Do resumes lie? National Credit Verification Service shows that 25% of MBA degrees listed on resumes, which they verify, are false. When hiring an individual, an employer has to put faith into the information an applicant has given them both on a resume and an application. This is the first step in determining if an applicant is capable of handling the duties of the available position.

Resumes are not the only point of misrepresentation. The Wall Street Journal found that 34% of job applications contain incorrect information about previous employment, job duties, or education. To properly manage these hiring risks, education and employment verification is paramount to ensure the applicant is capable of handling the work duties for which they are considered.

Reducing risk can save an employer everything including the profitability of the business. There is no way to reduce risk completely when hiring employees. An employer must arm themselves with as much information as possible to be able to make an educated decision as to what will best benefit the business. An employer can never do away with risk completely but they can educate themselves with as much data as possible to manage these risks.