1. FRAUD RISK MANAGEMENT: BE PREDICTIVE NOT REACTIVE!
The measure of a good company is not whether or not you’ve suffered a fraud; it is how you prepare for it, how you deal with it and how you move on afterward. Risk management practices lead management from being reactive to being predictive.
Fraud and corruption remain a major source of risk for organisations worldwide. What is more, the fraud and corruption landscape is constantly evolving, and with the rise of economic globalisation, it is also expanding. Yet many organisations are not aware of their fraud and corruption risk profiles and the measures to guard against fraud continue to be constrained by budgets and corporate policy.
The Association of Certified Fraud Examiners’ 2014 Report to the Nations found that, while less than ten percent of the cases in the survey involved financial statement fraud, the median financial impact of those cases was $1,000,000. Tips are the most common form of detection (43%); however, the proactive methods for fraud detection – management review, internal audit, plus account reconciliation activities (combined) – detected 40% of financial statement frauds. Twenty-six percent of those cases were perpetrated by executive management and 17% were perpetrated by the sales department. Financial statement fraud cases appeared most frequently in three industries: construction, oil & gas and manufacturing.
The above case only shows that most fraud detection is reactive. Some of the tools for reactive fraud detection include whistle blowing through hotline or ombudsman and fraud detection by accident e.g. through audit. Proactive tools of fraud detection entail continuous monitoring data analytics and attestations.
The object of what is analysed or attested is the result of a fraud and corruption risk assessment where all vulnerabilities are identified, assessed, prioritized and best strategies for prevention and monitoring put in place. It’s not just about avoiding fraud, which is almost inevitable; it’s also about how you respond. Risk management will provide the needed tool to move your organization fraud and corruption risk assessment from reactive to predictive.
and Corruption Risk Management
The measure of a good company is not whether or not you’ve suffered a fraud, it is how you prepare for it, how you deal with it and how you move on afterward. Fraud and corruption incidents have devastating impacts on any organization. The fraud and corruption incidents can destroy an organisation’s reputation, shake investor confidence and result in civil and criminal prosecution of directors and management.
Risk Africa’s Fraud and Corruption Risk Management services lead management from being reactive to being predictive in fraud and corruption management. Specifically, our service offering in Fraud and Corruption Risk Management include:
· Developing a fraud and corruption plan
· Fraud and corruption awareness training
· Fraud and corruption risk assessments
· Fraud and corruption benchmarking and gap analysis
· Fraud and corruption remediation
For more information on how to move your organization fraud and corruption risk management program from reactive to predictive, contact us on firstname.lastname@example.org.
© RiskAfrica 2015.