7 Ways to Manage Fraud Within Your Financial Organisation
Fraud is a serious problem for financial organisations of all sizes. According to the Association of Certified Fraud Examiners, the typical organisation loses 5% of its annual revenue to fraud. But you can take steps to protect your organisation and reduce your fraud risk.
Here are seven ways to do just that:
SAP Fraud Management
Why not partner with the world’s leading provider of enterprise application software? SAP offers a comprehensive suite of solutions to help organisations quickly detect and efficiently resolve fraud cases. And because SAP integrates seamlessly with popular accounting and ERP systems, you can be up and running quickly and with minimal disruption to your business operations.
SAP fraud management is a critical solution for organisations looking to protect themselves from the costly effects of fraud. With its comprehensive suite of tools, SAP can help you detect and prevent fraud before it happens.
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Implement Internal Controls
One of the best ways to combat fraud is to put internal controls in place. Internal controls are procedures or policies designed to prevent or detect errors or irregularities. They can be as simple as requiring two people to sign off on all disbursements over $500 or regularly reviewing expense reports for unusual activity.
The key is having appropriate organisational controls which will deter or detect fraud. You also must ensure your employees know the controls and how to comply with them.
Conduct Background Checks
Another way to reduce fraud risk is to conduct background checks on all employees, contractors, and vendors. These checks can help weed out individuals with a history of fraud or financial crimes.
You should also have a policy for what to do if an employee is convicted of a crime. For example, you may require the employee to repay stolen funds and terminate employment.
Educate Your Employees
Educating your employees about fraud and how to spot it can go a long way in preventing it from happening in your organisation. Ensure your employees know what types of fraudulent activity to look for and who they should report it to if they see something suspicious. You might also consider implementing an anonymous tip line where employees can report suspected fraud without fear of retaliation.
You can also provide employees with training on specific fraud risks, such as phishing scams or identity theft. This will help them be more vigilant in spotting these scams and protect your organisation from becoming a victim.
Technology can be a powerful tool in the fight against fraud. Consider investing in accounting software that includes built-in controls and safeguards or implementing spend management tools that provide real-time visibility into how money is being spent within your organisation. SAP fraud management is also a worthy investment.
You can also use data analytics to detect fraud. For example, you might flag any vendor payments significantly higher or lower than the average payment amount or any employee expense reports with unusually high amounts for meals or travel.
Technology can make it easy to monitor financial activity closely. This can be done through regular reviews of financial statements, expense reports, and other financial documents.
Look for red flags like unusual patterns of activity, significant or unexplained discrepancies, or transactions that don’t make sense. If you see something suspicious, don’t hesitate to investigate further.
Review Your Insurance Coverage
Be sure your organisation has adequate insurance coverage in place in case of fraud or theft. Many insurance policies will cover some or all losses incurred due to fraudulent activity. Review your policy regularly to ensure you have the coverage you need and that it is up to date.
You should also have a plan for what to do if fraud occurs. This should include who to contact, how to report the scam, and what steps need to be taken to mitigate the damage.
Use Data Encryption
Another way to reduce fraud risk is to use data encryption. This can help protect your organisation from data breaches that could lead to fraud. Data encryption scrambles data so it can’t be read without the proper authorisation and password. This makes it difficult for hackers to steal and use your data for fraudulent purposes.
Ensure all sensitive data, such as credit card and Social Security numbers, are encrypted. You should also encrypt electronic data via email or instant message.
Fraud is a serious problem that can have a devastating effect on your bottom line—but there are steps you can take to protect your organisation from becoming a victim. By implementing internal controls, conducting background checks, educating employees, leveraging technology, reviewing your insurance coverage, and partnering with SAP, you can help reduce the risk of fraud and keep your business safe.