November 18, 2019 International Fraud Awareness Week
5% of company revenue worldwide is lost annually due to fraud. That’s one of the startling statistics published in conjunction with International Fraud Awareness Week. Taking place from 17th to 23rd November 2019, the week aims to minimise the impact of fraud through awareness and education.
Perhaps one of the more thought provoking statistics to be published on the awareness week’s website is the comparison of the impact of fraud between companies with fewer than 100 employees against larger organisations. Making the point that smaller businesses not only place an enhanced level of trust in their employees they also have fewer resources to fight fraud, it is nevertheless worrying to note that on average smaller businesses will lose twice as much per successful fraud than larger organisations.
Moreover, within smaller organisations 42% of frauds are shown to have been as a result of a lack of internal controls. This contrasts with 25% in larger organisations. Overall the top three areas of concern are:
- The inability to effectively identify or address known fraud risks
- The lack of effective checks and balances
- A lack of communication between departments
On a positive note the banking industry does seem to be improving its rate of fraud detection. Statistics from Action Fraud reveal that in the first half of 2019, the finance industry prevented fraudulent attempts to the tune of £820m. That’s up 14% on the previous year and represents two thirds of all fraudulent attempts.
Nevertheless more needs to be done and the best place for businesses to start is by improving the level of fraud awareness and prevention in-house. Firstly a review of processes is recommended, looking at areas which may have the potential to be attacked by fraudsters. These include payments and invoices, the safe handling of data, and stock and purchase management.
However, processes are only as good as those who follow them. Implementing an effective anti-fraud training programme could help to turn employees at all levels of the organisation into front line defenders. The awareness week website suggests areas to cover within the awareness programme including a demonstration of how fraud can hurt both the organisation and its employees. Other suggested topics look towards providing a basic awareness of what constitutes fraud as well as who is likely to perpetuate fraud. This latter topic is designed to enable employees to better understand the warning signs which may indicate that fraud is occurring.