Lets Awake and Save Ourselves from Frauds!

We all know “Prevention is better than Cure”

It is known fact to everyone that Prevention is better than Cure, but it is also surprising to learn that individuals & many companies are unaware of fraud and its prevention programs, or they fail to review the fraud which has occurred, occurring or will occur to them. Hence don’t take any/effective actions to prevent possible fraud instances.

Fraud involves deceit with the intention to illegally/unethically gain at the expense of another. Steps can be taken to deter the occurrence of fraud and mitigate loss. A three-pronged approach of Prevention, Detection and Deterrence should be established to minimize the commission of fraudulent acts and associated losses. By including Fraud Management in overall management and governance of the organization, one can really prevent fraudulent activities in the organization which is always better than curing later on.?

Fraud is common for you, me and our organizations!

It is fact that all individuals/organizations are vulnerable to fraud. But it doesn’t mean that all are doing frauds. In our day to day activities, we interact with a variety of people, system, processes and motives behind them, hence it is important to understand and realize the true intent of the activities rather than just blindly believing what it pretends to be.?

Research by the Association of Certified Fraud Examiners (ACFE) found that the “typical organization loses 5% of revenues each year to fraud” with a median loss of $145,000 per case. Fraud is usually not discovered immediately and The ACFE found the median discovery time was 18 months from the beginning of the fraud. The more a fraud prevention program can improve your chances of discovering the crime, the smaller your losses will be.

Few Common Fraud Types

Fraud touches every area of our lives; it raises the price we pay for goods and services, consumes tax money, pulls resources from innovation and even costs human lives. It can be in the form of publishing misleading Financial/Non-financial information, Misappropriation of assets, Bribery / Corruption, Identity Theft, Insurance Fraud, Medical Fraud, Consumer Fraud, Procurement Fraud or in form of IT/Cyber Frauds, etc.

Fraud prevention is worth the effort?

Frauds may not impact business bottom line only. Sometimes losses from fraud are so large that they may threaten our business’s existence. Like in the networked digital world especially, near catastrophic failures can happen overnight. Before it is learnt by target. Just imagine, what will happen if IT Fraudsters redirects all incoming receipts to their accounts for a couple of minutes. The consequences of large failures can impose financial, reputational, moral, loyalty, and other brand-related costs that will persist for a very long time. The cost of a fraud prevention program is tiny compared to a major loss due to a fraud.

Even small loss matters in today’s competitive world. We see businesses competing fiercely on price in markets where the Internet provides access to commerce with a simple mouse click. Under these tight margin business conditions, managing the costs of fraud can make the difference between profit and loss. The organizations that reduce the risk of fraud gain an important competitive advantage over those that don’t.

Your company’s vulnerability to fraud is a “Known Unknown”

Unless you have designed and implemented a fraud prevention program using best practices, you simply do not know where the vulnerabilities in your organization are. However, just because you don’t know about them does not mean they don’t exist. The process of developing a fraud prevention program is beneficial both because it will help prevent future frauds, and also because it is a process of discovery, if fraudsters succeed in his/her efforts. Hence it is important to be known to all potential?possibilities and solve the puzzle of Known Unknown and make it Known Known.?

Fraud prevention increases confidence in your organization.

All business stakeholders including investors, partners, and auditors will have more confidence in your ability to control your fate if you have a strong fraud prevention program. You probably think a lot about the risks other organizations pose to you; the flip side is that they also think of you as a risk. Your demonstrated efforts to reduce the risks of fraud, both internally and externally, make you a BETTER investment, business partner, employer, supplier and a connection to have.

Who will be Right Man for Fraud Management Activities

When it comes to investigation, this can be a very delicate matter. Whilst there is a temptation to try to maintain a ring of secrecy around embarrassing fraud events, if you are serious about recouping financial losses or seeing the fraudster punished, the involvement of professionals should be seriously considered. Forensic work and evidence gathering is important. Professionals with appropriate Certification like Certified Fraud Examiner will be right person to handle investigations and also can help develop and monitor fraud management programs in the organization.

Conclusion

Fraud is not an issue that will simply ‘go away’. Individuals & organizations need to tackle it strategically and will benefit from being proactive rather than reactive, by preventing fraud before it can succeed. Awareness, Prevention, Detection and Deterrence are integral elements of an effective anti-fraud strategy. Its success will be of great benefit to any organization.