How to Safeguard Your Business From Fraud in the Workplace

In practically every area, firms prioritize protecting themselves from fraud. It is impossible to deny the potential for expensive damages monetarily ($117,000 in losses on average during a 12-month case) and to a company’s reputation. PwC discovered that within the previous two years, almost half of all organizations had suffered fraud, corruption, or other economic crime, with external offenders posing the most significant dangers. 

But in practice, company fraud mitigation might be trickier than in principle. 

The various forms of business fraud

Phishing and Malware

Two of the most prevalent types of external corporate fraud are phishing and malware. Both entail the theft of critical data but in two different ways. 
Phishing is when con artists try to obtain information—such as financial or private personal information—by deceiving their victims into thinking a request is legitimate. Phishing typically takes place through email or text messages. 

Malware, on the other hand, is a type of software that is intended to harm a computer or steal files. Malware can infect a device in several methods, but most frequently through the download of a program, the use of a website, or the opening of attachments. 

Phishing and malware have similar effects, varying from intellectual property loss to severe financial repercussions. Influential con artists may steal millions of dollars, gain access to trade secrets, and permanently halt business operations.

Emails with unique content or requests, poor grammar and misspelled words, extreme and unusual urgency, emails from unfamiliar domains, suspicious requests for login credentials or banking information, suspicious attachments, or software download requests from unknown websites are just a few of the most typical indications of phishing and malware.

Business email compromise

Commercial email compromise, or BEC, is a type of retail fraud in which con artists outside the company use workers as pawns. This is a scam email posing as a human resources employee and asking a payroll team member for banking information. High-level scammers can craft emails that seem and read like internal communications, leaving other employees without cause to question requests.

Internal fraud

Any fraud performed by an internal employee of an organization as opposed to a third-party con artist is referred to as internal business fraud. Unfortunately, there are several ways that internal fraud might happen, including: 

• Embezzlement: This type of fraud involves the theft of money or property by an employee from their employer, whether by taking actual money and objects, fabricating invoices, making phony checks, or in some other way claiming assets. 

• Accounting fraud: To misrepresent assets or cash or conceal inappropriate use, accounting fraud necessitates manipulating financial documents, such as ledgers or financial reports. Accounting fraud can be committed or covered up in several ways, including issuing fake invoices, changing accounting software, misclassifying expenses, and wilful reporting errors. 

• Information theft: An employee stealing secret information and either keeping it for personal use or selling it to a rival is committing this fraud. Any proprietary information, including intellectual property (IP), trade secrets, financial data, and customer lists, may fall under this category.  

• Bribery: Bribery is the acceptance of gifts or other forms of payment in exchange for unethical or illegal behaviour, such as the granting of contracts, the approval of expenses, or other unlawful conduct.

Several additional methods for combating fraud

No system is flawless, but putting these standards into practice can effectively aid in preventing fraud at its source and efficiently addressing it should exist defences prove ineffective. To sum up: 

• Inform and re-inform staff about the different types of fraud, the warning signals, and what to do when fraud is suspected. 
• Depending on the firm’s requirements, implement a procedure or system that may be utilized for reporting fraud, such as a website, hotline, or help desk. 
• Conduct background checks on all new hires, especially those in financial positions; continuous background checks may also be advised at businesses that must comply with regulations.
• Keep work tasks separate as needed to reduce the possibility that a single employee’s error could start fraud. 
• Review financial accounts for red flags, such as unexpected transactions or unverifiable statistics, in collaboration with internal and, if necessary, external auditors. 
• Make sure all data security and encryption procedures are up to date and invest in cybersecurity, whether internally or through a third-party company. 
• Ensure that all types of company fraud are covered by insurance coverage regarding losses or damages. 
• Regularly evaluate security measures in place; as businesses expand or customer needs change, what once protected a company may be insufficient. 

The objective is to set up the necessary mitigation layers.

When a company aims to reduce fraud, it’s crucial to ensure that all operations are as resilient as possible. To do this, one must start from within. To ensure that prevention measures are active on every level, combining services intended to reduce fraud; regulations centred around accountability and protection, and a modern, adequate infrastructure is possible.