Expansile Significance - "The Tip of the Iceberg" and how solving large losses often means addressing the insignificant ones

What the hell is Expansile Significance you ask? So did I, though the problem wasn’t with the term but with the fact that our industry never bothered to create one for a time honored concept. To better explain it consider combining the idea of the “tip of the iceberg” and the “Broken Window” Theory (here, here, and here, with dissenting view here).
We’ve all seen it – in one way or another. In my retail days it was not uncommon to ‘interview’ a sales associate about a minor policy violation, say ringing their own transaction or giving their discount to a friend (aka employee discount abuse). And for those familiar with interview techniques (I started with Wicklander-Zulawski – which competes with Reid and LSI) you know you approach these interviews similarly to a known loss (theft) interview anyway. So there you are going through you doing your spiel with you realize that this person has done much more than you knew – on one occasion I went from one missing gift certificate to four felony theft cases.

In the world of law enforcement, former NYC Mayor Rudi Giuliani encapsulated it with through enhanced enforcement based on the “Broken Window” Theory. You know, by showing that minor violations won’t be accepted you decrease the appearance that more serious deviance is acceptable. I don’t intend to try and prove the efficacy of NYC’s efforts now. Instead keep in mind that if a violation is the time of enforcement then it’s worth the time to do it right.

Embezzlement – or any other form of stealing from an employer – is a great example of this. It is HIGHLY unlikely that you, or any other investigator, will catch someone on their first theft. Maybe their first theft using that method; however there have probably been other losses that they have caused. I recall from my W-Z training that a thief probably will not remember every individual theft, but will remember the first act and the most recent. Then you can work out some mathematical averages to estimate the total loss (which should then be used to help identify further evidence to corroborate or support this estimate). With this in mind it is important to explore all avenues of loss in an investigation – that is if you want to try and find the most accurate estimate and maybe get some hints for improving your internal controls.

Anyway take the time to conduct investigations properly. Be thorough and don’t arbitrarily assume you have the answers. I know that in the real-world time often is the biggest constraint so at least recognize what you may be missing – and work on ways to evaluate this more efficiently.

Rob
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