Protect Your Business – Develop an Effective Fraud Risk Management Program

Fraud threatens every company and has a high price tag. Many businesses delay this crucial step, but you don’t need to put it off any longer. Learn to develop a comprehensive, integrated fraud risk management program and protect your company now.

Know yourself

To begin you must be able to assess the areas where your company is at risk. Be specific and realistic. Your weak spots probably won’t be the same as your close competitors or other similarly-sized businesses.

Look at your risks objectively, too. The question isn’t whether your long-time bookkeeper would embezzle funds, but could he or she find a way. While evaluating your risks, acknowledge both internal and external chances for misconduct. Ask yourself: how can employees at any level of seniority exploit these opportunities, both working alone or with others?

Take into account the costs of your risk, including the repercussions and long-term impact of overlooking it. Risk management is more than buying insurance. You take the critical steps to close exploitable gaps which leads to reducing your insurance needs.

Put it in writing

Develop both a written code of ethics and business conduct and document them. Fraud prevention begins at the top, with a clearly communicated commitment on the part of management. You can’t just have a code of ethics; you must be seen following it. Then look at your internal controls. Your policies should, at a minimum:

  • Segregate financial and accounting duties,
  • Require annual vacations for employees,
  • Restrict unauthorized access to offices and other facilities and computers,
  • Protect electronic files with user IDs and frequently changed passwords,
  • Address training supervisors and managers to spot fraud, and
  • Mandate internal and external audits that include scrutiny of fraud prevention measures.

Set priorities

Not all risk is created equal. Some risk could potentially cause damage that would affect the company throughout but is in all reality highly unlikely to occur. Examine the probability of different risks instead of looking solely at their size when determining where best to assign fraud prevention resources. Next set up a continuous monitoring system that will allow you to track and adjust controls as changing circumstances require. Risk management has a lot of moving parts and we are here to help you. For more information on creating a comprehensive risk control program contact us at 949-860-9902.