Original content provided by
Cyber-related corporate fraud is a pervasive threat in today's increasingly digital business environment. Dedicating appropriate attention to anti-fraud measures, including training, hotlines, recruiting, internal control and attitude are keys to minimising losses, but are organisations fully prepared?
Threatened financial health of companies
The financial losses of companies due to unfair practices, corruption and fraud usually exceed the value of $100,000. In most cases, the losses climb even higher. Our survey showed that 4% of companies reported damages of more than $100 million USD. Even smaller values than those mentioned can in many cases be liquidating for companies or negatively affect their financial health. Only 45% of surveyed organisations acknowledget being anti/corruption regulations.
After detection of fraud or corrupt practices, companies started to change processes and internal controls. According to the results of our global survey, up to 81% of companies did so. At the same time, insufficient internal control was in up to 58% of cases main reason for the occurrence of Fraud.
The duration of the fraudulent scheme matters
When a fraudster strikes, organization must act swiftly to identify the fraud, minimize losses, and fix security and control gaps. Catching fraud at an early stage can prevent small losses from becoming catastrophic. In 7% of the respondents even stated that the most significant frauds that were caught in their organization lasted more than 5 years on average.
Whistleblowing system
One of the tools to prevent unfair practices is whistleblowing. Creating a communication channel for reporting suspicions or knowledge of corruption or other types of fraud is an important step in the organization. According to Transparency International Slovakia, more than 35% of Slovaks would not report corruption or fraud in the workplace. Without creating conditions in the workplace for reporting fraud, it will be difficult to detect it. A global survey by BDO showed that only 43% of companies actually had such a system in place in the company, despite the fact that the largest part of fraudulent practices in companies was caught by this tool.
How to be prepared
Up-to-date technology, comprehensive policies, and employee awareness can work together to stop fraud at any point in its lifecycle. Base on survey responses, the following actions might prepare organisations for the challenges associated with corporate fraud:
-
Identify the risks
-
Analyse current systems and protocols
-
Develop and implement stronger controls
-
Train employees
- Maintaining vigilance
For more detailed results of the survey, look at the publication: