The 3 Best Ways to Protect Your Organization from the Inside Job

Occupational fraud is a big deal, no make that a really big deal! The Association of Certified Fraud Examiners has been studying fraud every two years for well over a decade and the statistics speak for themselves. The average organization is losing 5% of its annual revenues to fraud costing the world economy nearly $4 trillion a year. If fraud were a country, it would rank as the 4 th largest economy in the world – just behind Japan and just ahead of Germany. But even more startling is that fact that despite this ongoing study and dozens of others like it, few are listening. This 5% estimates of the cost of fraud has not improved one measly basis point in the last 10 years.

So what are you doing about fraud in your organization?

If you answered nothing, the good news is you are probably in the majority. However, the bad news is, that’s not the right answer. Here are three ideas for stopping fraud before it happens to you.

1. Develop a fraud policy
What is a fraud policy you wonder? Well, a fraud policy defines what constitutes fraud. For example, often times an employee who accepts a gift from a supplier or a customer doesn’t even realize that they are committing a fraud. But this type of illegal gratuity can be detrimental to the organization when such a gift conveys an advantage to the giver even if its just subconsciously.

A fraud policy will also define the process for investigation fraud and the repercussions for anyone who commits fraud. Those actions are often described in zero-tolerance terms which includes immediate dismissal and referral to enforcement agencies. When employees realize that your organization’s assets should not be treated as their own personal assets, they think twice about committing a fraud.

2. Set up a whistle-blowers hotline
The number one way fraud gets detect, by far, is through tips received. No one likes seeing someone else taking an unfair advantage or cheating. The key, however, is to give others a simple and anonymous way to submit tips that protect the whistleblower. Most tips will come from employees, but a surprising number actually originate from customers and suppliers so consider how you might gather tips from those sources as well.

The hotline might be set up as an email. It might be set up as a phone number. The tips should be received by senior management or even an independent director on the board, if one is available, to protect the organization against senior management fraud – which is often the most costly form of fraud.

3. Provide fraud awareness training
You might be thinking “are you crazy, raise awareness of fraud in my employees, aren’t I just enabling them?”

The answer is no, no you are not. As we discussed, our fellow employees are the first and best line of defense against fraud. By raising their awareness and training them on techniques to watch for and detect, you are empowering your employees to act as deputies in the war against occupational fraud.

Lucky for you, we have a course in fraud awareness. Take your head out of the sand and check it out today before you become the next statistic. Sadly, many of you may already be there and not even realize it.

Great course with very clear concepts and with supported professional evidence. Happy to have chosen doing it – Ervin Pecuni (Chief Executive Officer at VisionFund Albania)

Great course, Blair. This came highly recommended during a Finance All Hands meeting by our VP of Finance, and I would recommend it as well. Excellent, and fun too. – Eric Robison (Senior Credit and Collections Analyst at Intuit)