I recently found an article by Samantha Stauf on www.talentculture.com titled Preventing and Stopping Employee Fraud. In it, she tackles key elements of identifying and protecting organizations against fraud. According to Boston University, 45% of organizations have been affected by fraud and of that number, 54% reported the cost of fraud exceeded $100,000 … and 8% report losses over 5 million dollars. Clearly, fraud is a serious and frequent occurrence that means businesses suffer. What’s worse, those numbers will rise without intervention.
The challenge for many businesses is a lack of clear understanding of the types of fraud they are prone to encounter. Having such knowledge is fundamental in attacking the problem.
Stauf shares there are six common types of fraud and how they rank: Asset Misappropriation represents 69% of incidents and is when a third party steals company assets; Cybercrime (44%) as its name suggests, entails using technology to steal; Procurement Fraud (27%) includes dealings when an individual underhandedly gains an advantage through a bidding process; Accounting Fraud (23%) is replies on individuals misrepresenting the financial state of a company; Violating Intellectual property is recognized as intellectual property infringement at 19%; and the final 13% of types of fraud is Bribery and Corruption — whereby individuals accept bribes either inside or outside a company.
As mentioned above, unaddressed employee fraud can lead to significant loss, including monetary and reputation. So what options do business owners have to foster anti-fraud strategies? Stauf posits several suggestions: conduct annual fraud risk assessments; be prepared to evaluate any fraud reports outside the company; encourage employees to report any cases of potential fraud; conduct annual internal audits ideally by individuals unconnected to accounting decisions; and enlisting a whistle blower mechanism that doesn’t penalized employees reporting potential fraud.
As regards to a whistle blowing platform for employees, and encouraging employees to speak-up, Red Flag Reporting is a proactive industry leader dedicated to detecting and deterring fraud. We successfully help promote a safe and ethical behavior in the workplace by empowering employees to speak up (anonymously if they choose) when they experience or observe potential fraud. In fact, Red Flag Reporting was also recently honored as the first hotline provider in the world to be approved by the U.S. Department of Commerce as EU-U.S. Privacy Shield Framework certified.
For more information, please visit www.redflagreporting.com.