Final answer:
A company is reimbursed for losses due to employee fraud through an insurance policy. Regular premiums are paid to the insurance company, which then covers significant financial damages. Workman's compensation insurance is another form of protection for job-related injuries.
Step-by-step explanation:
A mechanism by which a company is reimbursed for any loss that occurs when an employee commits fraud is called an insurance policy. Insurance is a method of protecting a person or entity from financial loss where the insured make regular payments to an insurance entity, known as premiums. The insurance company then reimburses members who suffer significant financial damage from an event that is covered by the policy, such as employee fraud.
Employers can utilize workman's compensation insurance to cover injuries that occur on the job, in a similar manner to how they may use other types of insurance to protect against various potential losses, including fraud. While we can't eliminate moral hazards entirely, since people with insurance might be less vigilant, insurance companies can reduce its effect by monitoring behaviors and offering incentives for risk-reducing measures, such as installing security systems.