Combat Fraud
by Mohamed Bhimji on August 31, 2010
in Random Madness
Regardless of the industry you are in, fraud and other activities can take up valuable resources that can be used elsewhere in the organization. With external fraud, there is also internal fraud – most recently I read about a Apple Supply Chain executive that has been under arrest for his part in a pretty large kickback scheme. According to the reports in SiliconValley he had over $150,000.00 in US currency in shoe boxes and over $20,000.00 in foreign funds. To top this he’s got accounts all around the world, not to mention safety deposit boxes with even more money in them.
Most recent reports put the kickback scheme at $1,000,000.00 – a lot of incentive to behave dishonestly.
This probably isn’t the largest kickback scheme to be uncovered, nor will it be the last but it does go to show you that crime, fraud is an issue that affects all types of companies.
How can companies protect themselves? It is difficult, but one of the first items they need to have is a thorough policy in place and that policy explained to staff. No policy, while does not excuse this behavior only opens the doors to challenges if the behavior is uncovered.
How to combat retail fraud? The key is communication between stakeholders and the willingness to share what has been found to law enforcement so that they are better armed to catch the bad guys.
Your front-line staff and managers also need to be trained to spot patterns – or how to “connect the dots”. If you can spot this early into a cycle you have the potential to nip the issue before it grows.
Fraud, theft, dishonest behavior by employees (this also includes things like stealing time, or office supplies) hurts the business in many ways – it decreases employee morale, if employees talk to friends the word spreads of vulnerabilities and can hurt the company’s reputation and goodwill in the long run and in the case of a small business quite possibly turn a company from profit to loss.
While eliminating this type of behavior is difficult, if not impossible putting in policies in place to explain the ramifications of the action to staff is one step towards ensuring internal theft is not an issue and when issues arise they are investigated quickly, and action taken immediately.
Amazon has some great books on this:
This book is not as much about detecting fraud as it is about developing company-wide awareness and implementing detection measures. These are the keys to not only fraud prevention, but also security in general. My perspective is as an IT security professional, and I found this book to be thorough in that it covers all key items, and also to be applicable to any size business. What I especially like about this book is its wide coverage that touches on each of the most important elements of awareness and prevention, including an objective assessment of cyber fraud as a threat, an approach to analyzing risks and vulnerabilities, and how to implement controls and policies. In addition to these basics, the book also goes into the technical aspects of security (written so that a non-IT professional can understand the fundamentals), and related topics, such as information protection, and legal issues associated with web site content. While the latter are not specific fraud vulnerabilities, they represent business risks that are loosely related to fraud. Other material that I found useful and informative included the chapters on internal protection controls and conducting audits and investigations. |
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Unfortunately when it comes to fraud and these types of topics, you won’t find many reviews of books since very few companies and individuals will want to say “hey – that helped combat the fraud issue we had”.
