each department in your organization may face . Next , assign the risks a threat level of high , medium , or low . Seek support from Subject Matter Experts in each department who have direct knowledge of managing fraud together with relevant members from the Risk Management Department .
Implement Artificial Intelligence : Artificial intelligence ( AI ) refers to the simulation or approximation of human intelligence in machines . The goal for AI is to be able to do things such as recognize patterns , make decisions , and judge like humans . Fraud detection is improved and made simpler by the use of AI . It works quickly and continuously to protect your organization from fraud . Using a platform that incorporates machine learning is ideal , so that the whole process keeps improving . However , make sure that protocols are kept up-to-date in order to detect new risks .
Audit and Monitor for Fraud Threats Consistently : Maintain auditing and threat monitoring even after you ' ve implemented your fraud detection and prevention strategies . This guarantees the effectiveness of your strategies in preventing other types of fraud . If your present system is not able to identify new threats , you will need to train the AI or find an alternate solution .
Educate your Organization on your Fraud Detection System : When everyone in the organization is aware of how fraud prevention operates , the entire process works more effectively . Teach your teams how to identify fraud related issues using the AI system . Assign work to the designated officials who have been earmarked to address the issues brought up by the fraud detection system .
Revisit your Fraud Profiles regularly : It is important to establish the fraudulent activities your system identified in the preceding six months . Find out whether there are any updates required due to developments in a particular type of fraud . Review your fraud profiles again and add new risks as they materialize . Since criminals constantly enhance their techniques , make sure to include the new risks in your risk taxonomy so your teams and AI can spot them instantly .
Fraud Response : The purpose of fraud response strategies is to offer direction on how to handle discovered or suspected fraud cases in a methodical and standard manner . These are essential for minimizing damage and reducing the losses brought on by fraud .
Incorporating comprehensive investigation protocols , corrective action protocols , and reporting and disclosure protocols into fraud response plans is critical for organizations . Where vulnerabilities were found , the fraud control strategy may need to be modified to stop future occurrences of the same behavior .
The Board ’ s Role In Oversighting The Management Of Fraud Risk
Although I have already mentioned the key role the Board plays in Fraud Risk Governance , it is important that I expound on the specifics with regards to Board oversight role .
Establishing a Formal Fraud Control Policy
It ’ s the Board ’ s key role to ask if the organization ’ s fraud control policy includes the following essential components :
» A concise description of what fraud is , as well as the behaviors , acts , and attitudes that qualify as fraudulent .
» Identifies the specific individuals in charge of handling fraud incidents both inside and outside the organization , including handling the media , regulatory bodies and law enforcement agencies .
» Formal protocols that staff members must adhere to in the event of suspected or confirmed fraud .
» Whether employees are encouraged to report concerns regarding unethical behavior , actual or suspected fraud , or transgressions of the company ' s ethics policy and code of business conduct - in other words existence of the Whistle Blower Policy .
» A commitment to take the necessary steps to prevent fraud , to look into any cases of suspected or confirmed fraud , apply the responsibility matrix and take appropriate legal action against those who do so .
» A commitment that the business will work to recover money or property that the fraudster and other parties involved obtained illegally . To this end the Board should regularly review the fraud control policy to be in tandem with the prevailing business environment .
Inter-departmental Team to address Fraud Fisk Management
Key representatives from various departments can work together under the guidance of the head of risk management to handle ongoing fraud risk management initiatives and provide the Board with updates on a regular basis . Under its Risk Management ownership role , the Board must make sure that the risk management team does not face the following challenges that could hinder its effectiveness :
» Lack of clearly defined roles and |
responsibilities |
for |
individual |
team |
members . |
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» Ineffective communication strategy to guarantee knowledge sharing among team members .
» Insufficient training programs for team members regarding particular risks , like those resulting from novel technologies or business models .
Conclusion
Failures that are near catastrophic can occur over night in today ’ s highly networked digital world . Prolonged financial , reputational , loyalty , and other brandrelated costs can be incurred as a result of such failures . You just do not know where the vulnerabilities in your organization are unless you have created and implemented a fraud prevention program that follows best practices . The mere fact that you are not aware of the vulnerabilities does not negate their existence .
Organizations will quickly learn that the cost of a fraud prevention program is negligible in comparison to the impact of a major failure , as the reality of fraud has become more sophisticated and widespread than ever before .
Reuben Kisigwa is a strategic consultant and a certified competency-based curriculum developer . You can engage him vide mail at : RKisigwa @ gmail . com .