In his second video, David Shadwell, Accounts and Business Support Partner, looks at fraud risk for businesses – the conditions that increase the likelihood of fraud being committed and the practical steps to take to minimise your risk.
A transcript of the video can be found below. If you have a question about cyber crime contact our COVID team today at firstname.lastname@example.org.
Fraud risk for businesses
Welcome, I’m Dave Shadwell and this second episode looks at how there is a heightened risk of fraud at the moment, the reasons for that. As ever, we’ll cover some simple things you can do to reduce the risk of fraud in your business.
Firstly, why is there a heightened risk of fraud at this time?
Well, you might have heard of the fraud triangle which suggests there are three conditions that significantly increase the likelihood of fraud being committed. Pressure, or motivation. Opportunity, and rationalisation, which is when the fraudster is able to rationalise the situation as being acceptable.
Back to the first, pressure or motivation. Clearly, the current ongoing lockdown restrictions are placing a significant amount more financial pressure on lots of people. This financial pressure also might not be on them directly, but perhaps a family member or someone close to them in their community.
In terms of opportunity, most businesses have experienced a significant amount of disruption to how they operate. In particular, having to deviate from their usual controls and processes. This creates opportunity for individuals to exploit.
Some of the specific circumstances around the lockdown also provide reasons for people to rationalise committing fraud. “I’ll pay it back when this is all over” “I need to do this for my family” “these are exceptional circumstances”, that sort of thing.
Let’s consider what practical steps you might be able to take to minimise your risk. How could you prevent fraud or misconduct from occurring in the first place, how will you detect it when it does occur and what might be an appropriate way to respond.
In terms of prevention, going through a simple fraud risk assessment process will help to focus on any controls or processes that might be new, radically different to normal, or possibly even now absent.
Now you know what your specific risk areas are, this might reveal certain areas of concern that you want to have a closer look at. There are a number of analytics tools you can use to help visualise the data from within your business. This is about identifying outliers and anomalies which warrant a closer look. Software such as Tableau or Power BI are some of the best available and you could also consider outsourcing this to a data analytics expert.
One of the most important aspects of managing the risk of fraud is setting the right “tone at the top” on the importance of ethics and integrity, reinforcing a culture where everyone feels an obligation to raise their hands and report improper conduct, with appropriate, well understood channels to do so.
Lastly, it’s never been more important to keep close to employees, keep them updated with how the business is navigating through these challenging times and show them compassion. This will help to keep employee engagement up and give you better visibility to those who may be at greatest risk.
I’m Dave Shadwell, Partner at Chiene + Tait, thanks for watching.