Skip to main content
Michigan Farm Bureau Family of Companies

Fraud and Lawsuits: Ways to Reduce Risk as a Business Owner

Business owners face a variety of risks including fraud and lawsuits. Learn ways to avoid these stressful and expensive losses.
Date Posted: July 8, 2021

Reducing Risks to Your Business

Two of the largest risks business owners face are lawsuits and employee fraud. Both can cause a great deal of stress and are usually expensive losses. 

We recommend the following tips to help you avoid these risks:   

Employee Fraud

  1. Institute an anti-fraud policy. A policy, published in an employee handbook, helps prevent insider theft.  
  2. Educate employees on how to report fraud. Employees need to understand how to report any suspicion of fraud or theft and the guidelines for doing so.  
  3. Incorporate trust within corporate culture. Maintain an atmosphere where employees feel trusted and valued and are rewarded for their loyalty.  
  4. Compartmentalize job functions. When the same person both approves and pays invoices, it is easy for a crime to be committed. Adjust employee roles accordingly. 
  5. Consistently review your records. Utilize your accountants to survey employees, asking if they are aware of any fraudulent activities. 
  6. Investigate suspicious employee activity. Your human resources team can help initiate an investigation within the company.  

Liability Lawsuits  

  1. Form an asset protection plan. Create a list of potential assets you could lose from a lawsuit compared to your current insurance coverage. Review the plan with both your insurance agent and lawyer to limit your exposure from both an insurance and legal perspective. 
  2. Separate your personal assets from business assets. Although this action won’t limit lawsuits, you might be able to remove your personal assets from a lawsuit settlement.  
  3. Purchase appropriate Liability insurance. Contact your insurance agent to determine which excess coverages can best protect your business.  
  4. Form a risk management plan. Identify and eliminate unnecessary risk within your workplace. From performing repairs to enforcing safe workplace policies. 
  5. Specify your policies. An employee handbook should be available to all staff which clearly lists any policies directed to them, your customers, or the public.  


These are a few steps anyone can take to reduce their company's liability exposure. Contact your agent today for expert advice on your Business Insurance needs.  

Work From Home? Ensure Your Home-Based Business Is Covered

Will your homeowners insurance cover your business losses? A business policy may be the best coverage for your home-based business.

Understanding the Basics of Workers Compensation Insurance

Most businesses are required by law to provide Workers Compensation Insurance. This coverage is essential to protect your employees and your company.

Insurance Reviews: The Importance of Annual Evaluations

Insurance audits help identify changes in risks. Business owners should review their insurance coverages annually.