If your organization is like many others we encounter, the belief that “Fraud can’t happen here” is commonplace. Despite this belief, the media is awash with notices and pictures of former employees who are wanted by Police for theft of this, that, and the other. Other times, the notices and pictures are about individuals who ceased being employees of companies for reasons that are not disclosed!
Fraud is on the rise, and more so, digital and cyber fraud. As reported in our project frontline report, in 2019, Summit Consulting handled cyber cases worth Ugx. 171,142,500,000 (US $46,888,356) with an average of Ugx. 379 million direct loss per case. To download the report, visit https://www.summitcl.com/ubr/summit-project-frontline-report-2020/
When a belief like “Fraud can’t happen here” is held by top management, then, fraud risk management will not be taken seriously. Effective fraud risk management is built on top management awareness and commitment.
Those who subscribe to the belief that “Fraud can’t happen here” believe they have strong programs in place to prevent fraud. Interestingly, many refer to having in place documents like the company code of conduct signed by all employees as adequate. Although signing the code of conduct is necessary and an important element in the deterrence of fraud, it is far from sufficient.
What is required is Top management commitment to a strong anti-fraud program. When top management is aware and committed to fraud prevention, they support the assessment of fraud risk and enforce risk management initiatives directed towards the deterrence of fraud.
Anti-fraud program best practices include; Fraud prevention policies, regular fraud risk training, fraud risk assessment, fraud control monitoring, and fraud incident response plans. Organizations with robust anti-fraud programs are associated with lower fraud losses and quicker fraud detection and response compared to those without.
Our research has shown that having secure online whistle-blowing platforms like Summit Consulting’s Julisha.org that guarantees anonymity combined with fraud awareness training for managers and executives’ cuts fraud losses by half. Julisha.org is an anonymous whistleblowing platform that provides 100% anonymity and has been implemented by the National Social Security Fund (NSSF) on https://nssf.julisha.org
It is, therefore critical that companies place a strong emphasis on fraud prevention programs, to reduce opportunities for fraud occurrences.
As a start, a company may not deter fraud unless they know where your fraud risk exposures are and take steps to plug them. Also, not all fraud schemes affect companies equally, organizations must make decisions on how and where to direct their anti-fraud programs and efforts.
That is where the Fraud risk assessment comes in. But what exactly is a Fraud risk assessment?