Minimizing Fraud Risk: What Are Some Good Strategies?
Ever since the beginning of an employee's career, many businesses will take a great deal of time considering the application and reviewing the individual's professional and personal history. This is essential in decreasing the likelihood of fraud in almost any business organization. However, fraud can happen in almost any industry and organization, even if a company will practice open communication, transparency, and integrity.
According to research done regarding fraud and abuse in 2014, most businesses will; usually lose around 5% of the yearly earnings due to fraud within their organization. When it comes to these multi-million dollar industries and organizations, 5% can already account for millions of dollars worth of assets lost to fraud. What's a great way of ensuring that losses are at a minimum? Most experts would suggest investing in prevention and a fraud detection system, which is an effective means of reducing losses.
Every business organization must have an infrastructure that's designed with security and function in mind. There should always be a plan in place that will help prevent fraud. After all, prevention is better than having to chase after millions of dollars lost in revenue.
That said, what are some important ways of preventing fraud? Will you need to invest in these plans? Here are some good and cost-effective strategies that you can incorporate into your organization, even if you have to ask, what is account takeover fraud?
Implementing Internal Policies and Controls
Since fraud will usually happen inside an organization, internal plans and programs should help safeguard different company assets. Most companies will have an accounting and auditing team that will keep records to deter fraud cases. Most managers will also compartmentalize workers' duties and responsibilities so that it's easier to supervise what employees are doing.
In a small-to-medium business, compartmentalizing work detail will mitigate fraud. For instance, a restaurant will usually have a designated cashier, cook, waiter/waitress, and manager; having one employee tally in the receipts while another employee will prepare slips for depositing to the bank will help mitigate any forms of abnormal activities.
Automated Fraud Detection and Professional Assistance
Every year, there's always a new technology that's being developed. Automating most processes can help cut down on the amount of "hands-on" work that most people will have to do and ensure that there's more time for other more "pressing matters." Not only will this help cut down on energy and time spent on investigations, but this will also reduce the amount of human interaction, which can lessen the likelihood of fraud.
It's important to remember that fraud isn't just limited to happening within the business organization and can happen while most businesses interact with customers, business partners, and clients. If this is the case, businesses will also need to invest in their business's infrastructure and network. Security should always be a concern when it comes to automating many processes in the organization.
For specific industries, such as financing and loan issuing businesses, professional background investigations; and credit scoring are needed to ensure that the applicant is fit to take the loan and ensure no fraudulent activity is being conducted throughout the loan period.
Fortunately, there is a company with professionals that provide alternative data credit scoring solutions. This organization is known for helping institutions by developing high-quality and state-of-the-art software that can be used for a wide variety of industries when it comes to discerning data for credit scoring.
Cultivating a Transparent Culture
Lastly, employers will need to invest in their working environment to ensure that employees are satisfied and happy with their current position. Having a positive environment will usually decrease the organization's likelihood of fraudulent activities. Certain studies have shown that a company that will invest in its own work environment will retain its employees since they're satisfied with its being managed.
Having a clear structure in your organization, fairly compensated employees, standard operating procedures, and written rules are just ways to improve the working environment. If needed, you might want to have an open-door policy that promotes transparency. That way, it's easier for employees to approach managers and those in the upper echelon of the management. This makes it easier for employees to report fraudulent activities while increasing the productivity of the workplace.
There are a variety of strategies that businesses and conglomerates can incorporate into the workplace. Fraudulent activity isn't just something that can severely hinder the productivity of the workplace but can also affect the morale of those that are working honestly. That said, promoting transparency and automating much of the day-to-day processes can help mitigate the likelihood of fraud, whether inside the organization or from customers and clients.