External fraud threats capture a majority of the headlines. It seems like everywhere you turn another data breach powered by some external mastermind is reported. However, an even bigger risk to data security can exist – fraud from within.

Each year, billions of dollars are lost to employee theft, and the number of incidents are on the rise.

One recent example occurred on June 24, 2009, when Timothy Curley, an American Express database administrator, was arrested for allegedly stealing over 1,000 customer records, ultimately causing over $1 million dollars in fraud loss.

In most cases, the act of theft is brought to an employer’s attention by another employee or is discovered by accident. On average, it takes about 18 months for an employer to catch a stealing employee.

Among the challenges to detecting employee theft is that often it isn’t a new employee stealing. A long-term, trusted employee – typically at the management level – is often found to be the culprit.

So, on to the important stuff. Below are five key ways to prevent employee theft.

1. While it may sound obvious, there are many businesses that don’t take the step of screening job applicants. Employers should also consider running a credit check, as people with financial difficulties are more prone to commit fraud.

2. Never allow finances to be under the control of a single person. No one employee should be responsible for both recording and processing.

3. Secure sensitive data and create reliable audit trails. Have a global user ID for each employee to manage identities in various applications and systems. Keep “footprints” of every place an employee goes and everything accessed while there. Limit access to a need-to-know basis.

4. Make sure all checks, money orders and invoices are numbered consecutively, and regularly check for missing documents.

5. Review reports and audit trails detailing all credits made to accounts (This would detect, for example, if an employee was removing late fees from a member’s account.)

Lastly, know that a positive work environment can also help deter employee theft. Maintain an open-door policy, keep lines of communication flowing, reward hard work with recognition and practice fair and consistent employment practices.