Is your organisation at increased risk from Internal Fraud?

It is important to remember that the vast majority of people who work for you are trustworthy and honest. Unfortunately however there are examples of a minority of people exploiting the current situation to take advantage of their employers. In desperate times, desperate people can do desperate things. This could be anything from falsifying sickness or expense claims through to more sophisticated payment or income diversion, false accounting or misreporting of performance data.

If your organisation answers yes to one or more of the following then it could be at increased risk.

  • Some of my employees may be feeling unfairly treated at this time.
  • Some of my employees may be worried about their own or family finances at this time.
  • Some of my employees may feel increased pressure to achieve sales or performance targets at this time.
  • A manager may have issued a ‘just do it’ instruction at this time without worrying how things would be done.
  • The organisation has introduced new ways of working recently including remote working or online delivery channels.
  • Staff in key control functions such as HR, Finance, Risk, Procurement, Audit or Compliance have been furloughed or moved to frontline operational roles.
  • My organisation has introduced new products, services or is targeting new markets.
  • My organisation’s supply chain has been impacted by the crisis including new suppliers, couriers, shippers, agents.
  • My organisation’s procurement processes have been impacted including thresholds for competitive tendering.

This is not an exhaustive list and it does not mean that fraud is inevitable as a result but it does increase the risk. As many people will know from Donald Cressey’s widely used Fraud Triangle any actions that increase the motivation, rationalisation or opportunity increases the risk of fraud. This theory also provides the opportunity to reduce the risks by removing or reducing any one of those factors.

To help your organisation reduce the risks we have come up with a 10 point plan:

  1. Treat people with fairness and respect.
  2. Recognise where employees may be suffering financial worries or stress and address those concerns.
  3. Undertake a fraud or financial crime risk assessment that looks at the new and emerging risks to your processes and systems.
  4. Review existing controls (checks and balances in your systems and processes) to make sure they are still designed and operating effectively.
  5. Consider how your organisation is listening to and acting on concerns raised by employees.
  6. Ensure your processes for identifying if/when something has gone wrong are operating effectively, this could be your ‘speak up’ or ‘whistleblowing’ policy. Consider whether someone on their first day know that to look out for and how to raise concerns?
  7. Consider how data analytics or Artificial Intelligence solutions could help automate fraud prevention and detection in your organisation.
  8. Ensure your fraud response plan has been updated and continues to work in these times. Would that plan still work with people in remote locations, would it work at 3am on a Sunday morning?
  9. Train your employees on the risks, how to spot them and what to do if they are concerned.
  10. Constantly monitor and review the above as things will change over the coming weeks and months.

How we can support you

It can perhaps seem daunting to think of all of the things you need to cover in identifying how you or your organisation might be vulnerable to fraud and cybercrime and how you can protect it.

For those who would like more help we have a free to attend webcast – Managing Fraud Risks in times of crisis. This will provide an overview of the types of risk (internal and external) that organisations need to consider at this time, together with some top tips on how to prevent or detect those risks.

Our unique Fraud Management Resource Centre has a wealth or resources, guides and tools available free. For more general coronavirus scam warnings please also see our blog post coronavirus stay safe online

We are also inviting you to ask us a question and we will provide our response and post these online during this crisis. Simply complete the form below to submit your question.

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