People make mistakes. As the saying goes, “to err is human." When it comes to employee errors, most of the time these mistakes can be easily fixed. However, there are times when an employee error comes with a costly consequence. Even something as minuscule as a typo can have dramatic financial repercussions. Last year, a typo caused an outage in internet giant Amazon’s web services, leaving several large social-media platforms, web publishers and other apps and websites out of commission for several hours.
The error occurred when an employee entered a command incorrectly and removed a large number of servers rather than the few that were intended for repairs. It took four hours for Amazon’s systems to be entirely rebooted and services to be restored. While the mistake only caused a temporary outage, the financial ramifications lasted much longer. According to an estimate by Cyence, an economic modeling platform, the mistake cost S&P 500 companies $150 million in lost revenue. After the incident, Amazon publicly announced that they would be taking steps to prevent a simple human error from causing another similar disaster.
As an employer, you don’t want to penalize employees for something they did accidentally, but as a business owner you need to protect your operation from as many preventable financial risks as possible. Here are a few more costly employee errors.
If you’ve ever sent a sensitive email to the wrong person, clicked a link you shouldn’t have clicked or accidentally hit “reply-all” on what should have been a private conversation, you know how easy it is for an email blunder to happen. Often times these mistakes mostly cause embarrassment, but in some cases they can cost a business money or even lead to a lawsuit, depending on what is said or revealed.
Loss of Company Property
Losing your keys or your laptop can be inconvenient, but losing your company’s keys or laptop can be an expensive mistake. In addition to the cost of having to replace lost items, loss of company property can lead to even costlier problems such as a data breach or building security issues.
Improper Storage or Disposal of Information
Throwing away a few pieces of paper may not seem like a big deal to an employee, but if the papers contain sensitive information, it could mean big trouble if not disposed of properly. If employees are not equipped to make the call on whether or not certain information is considered confidential, their small mistake could have a big financial impact on the company.
Many of these errors can be prevented with proper training and clear policies and procedures. In some cases, it may be necessary to let an employee go if they are consistently making costly mistakes - a decision that could potentially result in claims against the company relating to management decisions. However, errors and omissions (E&O) coverage can help protect against financial loss resulting from these types of claims, paying for legal fees and indemnity payments for settlements or losses in court and giving business owners one less expensive error to worry about.
About Axis Insurance Services
At Axis Insurance Services, we aim to help our customers identify their exposures and protect themselves. Founded in 1999, we offer insurance programs to a wide variety of professionals and industries including attorneys, real estate, healthcare, architects, and more, and also have a wholesale division. We pride ourselves on offering flexible insurance coverage tailored specifically to each customer’s needs. To learn more about our solutions, contact us at (201) 847-9175 to speak with one of our professionals.