Facts and figures
Incredibly, fraud and cybercrime account for almost half of all crimes. In its Fraudscape 2017 report, the Credit industry Fraud Avoidance System (CIFAS) states: “With almost one in every two crimes a fraud or cybercrime there has never been a more urgent time for organisations to be alert to both the external and internal fraud threat.”
Frauds are usually discovered 18 months after they have begun and in more than half the cases involve graduate or post-graduate employees, according to the Association of Certified Fraud Examiners (ACFE).
Although fraud awareness has increased with wide media coverage, directors of organisations are putting in place insufficient tools to prevent it. Non-compliance behaviour happens in all types of organisations across all industries.
The potential impact of fraud on your organisation and you
Fraud is a bigger threat to your business than you might think. According to the 2016 Report to the Nations on Occupational Fraud and Abuse published by the ACFE, a “typical organisation loses 5% of revenues each year to fraud” with a median loss of USD145,000 per case.
Fraud is the unknown part of your known revenue. The damage it could do to your finances and your company’s reputation could even put you out of business. Your own reputation as a director or manager will also be tarnished by the presence of fraud in your organisation.
How you would benefit from a compliance program
Fraud occurs much more often than you realise. Of course, you trust your employees, but do you really know exactly how each of them treats your cash and the other assets of your organisation, all of the time? Employees can, in fact, be your biggest liability, with the vast majority of perpetrators first-time fraudsters (2016 Report to the Nations ACFE).
At the end of the day, as a director, you are accountable and responsible.
A compliance program reliably allows you to set the rules then control and, for instance, trace the assets of your business, helping you mitigate the fraud risk – a real asset in a hyper-competitive world.
Your program will become a competitive advantage, convincing investors, suppliers, clients and other stakeholders that you have a global risk mitigation approach and, more importantly, that you know exactly what’s going on within your business.
This all means that they will feel safe with your organisation and with you as a director.
How is it done?
To be efficient, controlling fraud risk should be addressed at the board level and then implemented through every level of an organisation. The Board of Directors should show the way and ensure that there are no exceptions to the rules – particularly among themselves.
Your compliance program should be tailored to your organisation. Policies should be easy to follow and simple to implement.
It should be communicated properly to your team so they understand what the organisation is expecting of them.
Almost half (46%) of fraud cases arise from tip-offs (according to the ACFE) so it is vital that you integrate a reporting line into your program. Whistleblowers could be any stakeholders – your employees, but also suppliers and clients.
Your compliance program should be constantly enforced and regularly, as well as randomly, controlled and checked.
How can you find out more?
I am passionate about compliance & fraud prevention and will assist you to personalise a compliance program that will fit your organisation, so get in touch with me, Solange Martin, for help and advice. Finding out about compliance is always a good investment of your time and money, so put it at the top of your to-do list.