8 Steps to Embed Fraud Prevention into Business Operations

Posted by

Matt Green

on 18 Sep 2023

We all think the best of our colleagues. Yet staff fraud remains a common way businesses lose money, from petty theft to corrupt payments.

Embed Fraud Prevention into Business Operations

As such, fraud prevention should be a major concern of any business. But how can you discourage fraud and build fraud prevention into your company culture?

Fraud prevention should be a multi-pronged strategy, ranging from enhanced security measures to ensuring employees never feel discontented enough to harm the company. One crucial aspect of that strategy should be fraud prevention training and good employee management.

fraud prevention training

Source: Zippia

However, there are some simple ways that you can prevent fraud by integrating training into your employee management strategies.

Free Internal Fraud Training Presentation

1. Embed fraud prevention into management

The best place to start with fraud prevention is with your leadership team. Your leadership team are instrumental in implementing and maintaining corporate culture and is expected to model the values and behaviours expected of employees.

They are also responsible for managing employees, including monitoring them for any sign of fraudulent behaviour.

How to embed anti-fraud into management
  • Educate company leaders on types of fraud.
  • Establish ‘red flag’ indicators of fraud in your team.
  • Run through the reasons why an employee may commit fraud.
  • Ensure that every leadership team member is fully familiar with your fraud prevention policies and procedures and understands their responsibilities.
  • Familiarise team leaders with the Fraud Triangle (shown below), demonstrating the factors commonly contributing to employee fraud.

fraud triangle

Source: accountingproficient.com

Giving fraud prevention training to your team leaders and managers will lay strong foundations for the overall protection of your business.

2. Build fraud prevention training into onboarding

You should prioritise fraud prevention training from the start of an employee's tenure. So, it's vital to incorporate it into your onboarding process.

Much of your onboarding process may already be designed to prevent fraud. For example, checking an employee's identification verifies that they are who they say they are. On top of this, you can also use employee onboarding to set the tone for your employee's future work at your company.

There is a risk that being too heavy-handed with fraud prevention training at onboarding could make your employees feel unwelcome. Nobody wants to work for a company that seems to hold every employee in suspicion.

One way to get the balance right is to ensure the new employee feels properly integrated into the company culture and understands that they are valued in their role.

A positive and caring company culture plays a huge part in fraud prevention. Employees who feel valued in their work and enjoy their work environment are much less likely to commit fraud.

So, make sure your new employees know that they are not under any direct suspicion and that if they have any problems, they can take them to leadership with no fear of retribution.

3. Reinforce anti-fraud policies and procedures

Robust anti-fraud policies and procedures are essential to any fraud prevention strategy. Your anti-fraud policies and procedures could include things like:

  • An anti-fraud statement, i.e., a statement that your company is actively working to prevent fraud and will take appropriate measures to deter, identify, and prosecute fraudulent activity.
  • Definitions of activities and behaviours that constitute employee fraud. This could also include a general code of conduct.
  • Information about who is responsible for each element of your fraud management strategy and how they should undertake their responsibilities.
  • A description of the procedures to be followed if someone suspects an employee of fraud.
  • A damage-limitation plan. This section of your anti-fraud policy could be quite large and include things like dealing with the authorities and a media management strategy.

As you integrate employee fraud prevention training into your strategies, it is worth reviewing your anti-fraud policies and procedures to make sure they are robust. If you change anything, make sure that everyone knows about the changes.

Regularly reviewing your anti-fraud policies will reinforce them. It may also be worth periodically reviewing the policies and procedures with your staff to ensure that everyone is up to date.

fraud awareness

Source: ACFE.com

4. Involve staff in potential fraud identification

As mentioned above, fraud prevention training can be difficult for employees. They may feel they are working in a suspicious environment in which everyone is watching everyone else for signs of fraud. That is not a comfortable prospect even for the most honest of employees.

By involving your employees in fraud prevention, you can improve your fraud prevention strategy and remove that feeling of being under suspicion. Rather than taking a defensive position and regularly informing them of the dire consequences should they commit fraud, make your employees feel empowered and trusted by involving them in fraud prevention.

For example, you can give employees the tools, knowledge, and techniques they need to spot fraud. There are several red flags that employees and management alike can look for when they suspect fraud.

That said, it is worth noting that these factors could be completely innocent, so assure employees that no assumptions or accusations will be made without an investigation and conclusive proof.

Free Fraud Prevention Good Practice Guide

5. Communicate anti-fraud prevention messages

It is worth regularly reiterating your fraud prevention messaging. Make sure that everyone understands your anti-fraud policies and procedures.

Regularly sending out smaller fraud prevention messages could be a more effective and much less heavy-handed measure than running through your entire fraud prevention training roster less regularly.

employee theft statistics

Source: financesonline.com

6. Establish KPIs for fraud prevention

To figure out whether or not your employee fraud prevention training is working, set some KPIs.

The KPIs you choose will depend on the opportunities for fraud available to your employees. For example, if inventory theft is a big risk, closely monitoring inventory metrics would be a good idea. A low anomaly rate would be a positive KPI, indicating that your inventory is not being misappropriated.

Fraud prevention KPIs can be hard to monitor, as fraud can encompass many different metrics and take many forms. As such, the right software is essential.

There is software dedicated to fraud detection and uncovering fraud patterns. You can use this software to plan out key risk indicators (KRIs) and, from here, set out KPIs.

You can also use Enterprise Resource Planning (ERP) software. This is excellent at collecting data from all relevant channels and platforms and integrating it into a single, easily accessible platform.

With ERP cloud computing, you can access your metrics and check KPIs anytime. This gives you immediate and clear access to your inventory and sales data, making spotting discrepancies easy.

7. Conduct regular fraud prevention assessments

Regular fraud prevention assessments will help you measure how well your fraud prevention training is working. Use your assessments to measure:

  • Employee understanding of fraud prevention policies and procedures.
  • Your overall fraud rate (i.e., the number of confirmed fraud cases dealt with).
  • Current, past, and new fraud risks.
  • The current relevance of your fraud prevention policies.

You could even run fraud simulations to test the strength of your fraud detection policies and identify weak points in your strategy.

8. Solicit feedback from employees

As your employees are the ones who will be experiencing your prevention training, it makes sense to get their feedback on how well it's working.

Let your employees know they can be as honest as they need to be with their feedback. It is important that they feel they can give you a true account of your fraud prevention training strategy, both the good and the bad.

feedback benefits

Image sourced from zavvy.io

How to avoid staff alienation

It is important that your employees feel supported by their management team, not that they are being spied on. If fraud prevention isn't handled well, you risk alienating employees by making them feel they are under constant suspicion.

You could use business management software for a more “hands-off” approach. This will have the double benefit of automating key tasks, like payroll, while simultaneously collecting performance metrics, which will help to indicate employee dissatisfaction and tackle fraud at its source.

If you want to take more of a heavy-handed approach, you can also use the previously mentioned fraud detection software, such as TrustID. This will help protect your business from all types of fraud, including employee identity checks that can be used in recruitment.

Internal Fraud Training Presentation

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