Final answer:
The party protected by a fidelity bond is the employer or the insured entity.
Step-by-step explanation:
A fidelity bond is a form of insurance that protects an employer or the insured entity against financial losses incurred as a result of fraudulent or dishonest acts committed by their employees. The primary purpose of a fidelity bond is to safeguard the employer's interests, ensuring coverage in case of theft, embezzlement, or other dishonest actions by employees.
This type of insurance provides a layer of security for the employer's assets, finances, and operations, allowing them to mitigate risks associated with employee misconduct. By obtaining a fidelity bond, the employer gains protection and financial recourse in situations where employees engage in fraudulent activities that could otherwise result in substantial financial harm to the business.
Therefore, the party directly shielded by the fidelity bond is the employer or the insured entity, offering them a measure of assurance against potential losses stemming from employee dishonesty.