Fraud Risks: How to Measure Them

Fraud Risks: How to Measure Them

Fraud risks are a common type of risk that every company faces. It can bring a devastating impact for both business and public, from draining financial resources to a damaged reputation. When the risk is overlooked, it can put the company in a vulnerable situation. Measure your company’s fraud health by answering the following simple yet powerful questions:

  • Does your organization establish a process for oversight of fraud risks (e.g., an audit committee)?

  • Does your organization communicate to business unit managers that they are responsible for managing fraud risks within their area?

  • Does your organization implement a regular identification of the significant fraud risks?

  • Does your organization have a policy on how to manage fraud risks?

  • Does your organization give clear guidance on what behavior and actions are permitted based on its core values and which ones are prohibited?

  • Does your organization conduct regular training for all personnel upon hiring and thereafter, concerning the code of conduct, seeking advice and communicating potential wrongdoing?

  • To what extent has your organization approved tolerance for different types of fraud risks?

  • Does your organization provide an open communication for employees who seek advice when faced with uncertain ethical decisions and communicate their concerns about known or potential wrongdoing?

Companies that have appropriate anti-fraud controls in place will more likely to handle fraud better. By being aware of the gaps and taking preventive actions, companies have a chance to fix the problem before becoming a victim of a major fraud. Remember that prevention is always better than cure.

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