With the progressive global outlook and technological advancements, the fraudulent activities are on the increase. This has become a significant risk especially for startups and other small business owners. The adoption of advanced technologies and sophisticated organizational structure has made such corporations susceptible to fraudulent activities. consistent with a 2014 research by Global Nation, organizations lose 5% of its annual revenue thanks to fraud, of which 85% of cases are committed by internal employees.
A rising number of fraudulent cases throughout the companies has made it mandatory to implement fraud prevention and detection strategies, thus boosting the worldwide fraud detection and prevention market.
Here are a couple of strategies to safeguard your business mitigating the risks of fraud:
1. Corporate Culture
A strong corporate culture is the pre-requisite for any organization. Corporates should fix certain procedures and policies to control its employees. the most accountable person, the organizational structure of reporting systems, the reporting manager, job responsibilities, segregation of duties, and limitations must all be clearly defined. The organization should investigate a candidate’s history and background before hiring.
Organizations must be crystal clear to the workers about their fraud prevention tactics. Proper training should be provided to employees about any documented policies defining fraud, its prevention and detection measures, before implementation. A policy for all types of fraud should be introduced to urge obviate internal fraudsters.
Another essential strategy to detect or prevent fraud is control of the organizational system. control basically refers to norms ensuring the safety of the corporate also as its assets from any quite fraudulent activity. this technique should be revised and updated on a frequent basis as per the changing industry standards. It ensures the effectiveness of the system.
The most essential part of an indoor system is documentation. it’s also the foremost significant method for fraud prevention. the probabilities of fraud are often minimized by initiating documentation of all procedures and transactions. A manager should be used liable for approval and countersigning of expenses for better transparency. all types of physical and technical approaches to confidential documents should be restricted.
3. Independent Audit System
Regular and surprise audits should be conducted by an independent audit team to stay a regular check on the security of the system. all kinds of vacation balances should even be checked without fail.
The audit committee should be responsible for monitoring the quarterly and annual audits. This team of experts should even be liable for validating the results of any internal audit. As stated by reports, it’s the interior audit system that’s in charge of the detection of 29% of all fraud cases.
4. Operational Reporting System
A reporting system that’s operational and effective are often helpful in reducing fraud in companies. Employees should remember of the reporting system if they have to report any quite suspicious activity. A reporting system that keeps the person reporting the fraud anonymous could be more fruitful because it will keep the identity of the worker private while reporting his/her colleague.
To make this technique more beneficial, the workers should be encouraged and ensured that they won’t land in trouble if they report anything that sparks doubt in their heads.
5. Professional Expert for Fraud Prevention
This is another surefire strategy to mitigate the deceitful activity. Companies can hire certified fraud prevention experts as a neighborhood of the fraud prevention program. These experts can convince be very crucial for creating and instigating fraud prevention policies and invincible strategies.
We must remember the very fact that fraud isn’t restricted to the dimensions of the corporate or the organization. this will happen in each and each organization from banks to insurance firms, business startups to colleges and universities. A weak system is all it takes to urge the fraudsters to succeed.
Hence, so as to detect and stop such frauds, every organization should take necessary measures and instill a robust risk management system.