Fundamentals of Fraud Risk Management and Prevention

Every leader in every business, education, government and not-for-profit organization has at least one thing on common. We all want to prevent fraud on our watch.

While there are never 100% guarantees, these six actions dramatically improve your odds of success

1. Strong Fraud Prevention Controls – Of course, formal procedures and daily behaviors directed at preventing fraud are the foundation of any anti-fraud effort. No surprise here. Preventive controls limit access to resources and information. They provide for high-quality recording, review, approval, and summarization of transactions and other events. And they ensure that objectives are achieved and organization assets are protected.

2. Clear Fraud Prevention Responsibilities – Every employee, supervisor, manager and executive must know exactly what to do and what to avoid when they suspect wrongdoing and fraud. Tell them what you expect in advance. With precision and clarity. Don’t leave them wondering about required next steps.

3. Open Brainstorming of Risks – Have you ever initiated an open discussion of what could go wrong? If not, start today. Bring it up in a staff meeting. Say, “You know, we’ve never talked about fraud risks in our business or work group. Let’s do that right now.” Get the input of everyone. You’ll be pleasantly surprised just how willing they are to share their concerns – and their desire to better manage your risks.

4. Quick Detection – The best Fraud Prevention campaigns bring the one-two punch of prevention and quick detection controls and daily behaviors. Despite best efforts at prevention, it’s just a good idea assume that some wrongdoing will slip through your defenses. When that happens, be ready to find it right away – same day, same week, same month. No more.

5. Employee Fraud Prevention Skills Training – Meaningful ‘how-to’ manager, first-level supervisor and controls staff training closes the gap between expectations and the ability to deliver on the job. Skills training that goes beyond general awareness and shows participants exactly what can go wrong but what it looks like in the records, behaviors and relationships they see every day. Informed engaged employees are your first and last lines of defense. Teach them exactly what they need to know.

6. Confidence to Report Suspicions – Every member of your team needs to feel confident to speak up when something doesn’t look or feel right. After all, they’re in the best position to know. They are the heroes who are ready to take action and report what doesn’t look right to them. And they must feel safe. Break down any barriers that discourage reporting. Make it easy to report – including anonymously.

How does your organization stack up? These six ideas form the foundation of any meaningful Fraud Prevention campaign. But they’re just the start.

Reach out to us to find out more.


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