Fraud Management Tips For Businesses
With diligent efforts to mitigate risks and maximize efficiencies, businesses believe that they’re 100 percent prepared for anything, including the unexpected. However, this isn’t always the situation, especially if they tend to underestimate one of the reasons for losing money, which is fraud.
By definition, business fraud refers to illegal and dishonest activities undertaken by individuals or organizations to provide advantageous financial gain to businesses. The common examples of business fraud can include identity theft, phishing emails, money mauling, and cyberattacks. Hence, to minimize the devastating consequences of these well-known scams that target both small and large businesses, implementing a good fraud management policy can be an excellent idea.
For most business owners, below are the fraud management tips to consider from the get-go:
Assess Current Business Processes And Identify Potential Risks
For most businesses, it’s crucial to review the current processes and determine the potential risks to ensure proper fraud management and prevention. When they take a second-look on their internal business processes, they may be able to identify any loopholes or areas that need to be strengthened to mitigate the risks brought by fraudulent acts.
In other words, the more they know the weak points of their company rules and procedures, the more they have opportunities to discover and stop a suspicious transaction from affecting their company reputation as well as overall financial situation.
On the other hand, as many business owners believe that their fraud management strategies can be best handled by professionals, they can work with a reputable team of fraud experts who can help solve digital and financial fraud risks in the organization.
Provide Proper Internal Controls
In addition to reviewing the current business processes, the next thing to do to manage fraud is to implement appropriate internal controls. These are plans and programs which are intended to protect the company assets from being targeted by hackers, fraudsters, and cybercriminals.
Thus, to deter and detect fraud and theft, the following are the internal controls that should be kept in mind by businesses these days:
- Segregation of duties: This can be one of the important internal controls designed to minimize the risk of fraud. By segregating duties, companies can easily and quickly reveal any discrepancies in the processes and transactions.
- Documentation: This can be another internal control that business owners shouldn’t take for granted. By having proper documentation, they can quickly review the transactions on a regular basis, thereby helping them recognize any fraudulent acts perpetrated by fraudsters against the business.
Safeguard Your Computers And Network
With the availability of many technological advances these days, cybercriminals learn to adopt innovative methods designed to defraud companies using the computer and network systems. Because of these, business owners should look for ways to protect their computers and networks from being a victim of some fraud tactics, including cybercrime. These can include:
- Installing hardware and software firewalls for additional protection;
- Downloading a good anti-virus software which can spot and remove viruses and malicious software;
- Creating secure passwords and making sure the employees don’t share the same passwords to minimize the risks of fraud;
- Safeguarding their computers by using a Virtual Private Network (VPN) if there are remote workers
- Activating the two-factor authentication feature for the employees’ computers.
Be Wary Of Cybercrime Warning Signs
Due to the introduction of modern technology, many businesses have been victimized by cybercrimes undertaken by fraudsters. So, in addition to some security features incorporated in the computer and network systems, it’s important to recognize cybercrime warning signs as part of an effective fraud management strategy.
These are the red flags that most businesses should be aware of to safeguard their organizations:
- Unfamiliar sender
- Poor grammar and misspelled words
- Extreme subject lines such as those marked as urgent
- Hyperlinks and email attachments
- Requests for personal information
As stated above, there can be several warning signs of cybercrime that should be taken seriously. Because of this, it’s crucial for every business which is operating digitally to come up with policy requiring all employees to be vigilant in making online transactions, including receipt of email. That way, they can handle their fraud management strategy more efficiently.
Set Up A Good Corporate Culture
Apart from cybercrime, employee fraud is also one of the common types of business fraud that most businesses should be wary of. Primarily, employee fraud refers to an act involving the use of deception to take advantage of a position of trust or authority. It can pose a significant risk to both the companies’ reputation and financial health.
Luckily, there are ways to manage and prevent fraud and theft from affecting businesses. One of them is to set up a good corporate culture through the following:
- Implementation of fair employment practices: These can be done by setting up written policies and procedures and a clear organizational structure that supports a great fraud management and prevention system.
- Implementation of an open-door policy for employees: This can provide employees an open line of communication with the upper management, making it easier to tackle problems about their jobs and overall employment experience. As a result, employees will be discouraged to commit acts which are intended to defraud the company for personal financial gain.
The Bottom Line
Indeed, fraud can happen in both large or small companies across several industries. Thankfully, businesses, regardless of size, can follow the tips mentioned above to effectively manage fraudulent acts and stop these from damaging their good reputation and financial stability. Besides, the more they know how to fight off fraud, the more they can grow their businesses and make them successful.