The fraud perpetrated against businesses affects every industry. As new tools and methods are developed and shared in cyberspace, fraud is practically an industry in itself. News headlines seem to suggest that it’s getting worse in terms of number of incidents, amounts stolen, and boldness of tactics. Organizations of every size are vulnerable. Here are some key suggestions to protecting your business.
Information Security
One of the greatest vulnerabilities lies in digital communications. Networks are frequently probed by resourceful hackers looking for access to sensitive data that can lead to fraudulent use of financial accounts, identity theft, and stolen intellectual property. Every company should implement multiple layers of protection that include encryption, firewalls, anti-malware programs, user logs, spam filters, data backups, and automated intrusion detection and alerts.
Employee Education
Train your employees to be vigilant on both spotting and reporting suspicious activity of all kinds. You could even provide incentives to ensure that this is taking place on a daily basis. All policies regarding security and fraud prevention, including the latest threats, should be written up and made available for reference so everyone on the team knows exactly what to watch for and what to do when the worst happens. This can include channels for providing anonymous tips to warn of insider fraud.
Internal Audit Program
Both scheduled and surprise audits should take place from one department to the next to help monitor and deter dishonest activity. Every dollar and every single physical asset needs to be accounted for, including who authorized or carried out transactions and when. Accounting, inventory, data processing, purchasing, and shipping are all areas where both employees and external partners may have opportunities to fudge the numbers or use your credit to their own profit.
Operational Reviews
There should also be reviews of each new contract, invoice, credit statement, or purchase order. These should be looked at from a security as well as a bookkeeping perspective. Be aware of everyone who has access to related paperwork or data, and who is included in communications, including vendors, partners, and contractors. Nobody should have access to information that isn’t absolutely necessary to performing their job function.
Accidents and Injuries
Another low-tech but still common source of fraud is alleged injuries to employees, customers, and visitors. Anyone who can fake an injury may be expecting a windfall at your expense. Surveillance cameras can help to guard against this. But part of employee training should also be a system for immediately reporting such incidents, including exact locations, descriptions, times, and witnesses. Experienced fraud lawyers, and they should be consulted immediately if any party is suspected of fraudulent activity.
Fraud can strike your company in many ways and cost millions of dollars. It’s worth your time and money to incorporate all the measures you can to see that your risks are minimized.
