Fraudulent activities can cause serious financial losses and damage to businesses. To protect their organizations, companies must develop a well-structured fraud prevention plan that includes preventive measures and procedures to manage the risk of fraud. The framework should incorporate clear policies and procedures for detecting, preventing and responding to fraud. Here are seven strategies that businesses can use to prevent and detect fraudulent activities.
1.Know Your EmployeesFrauders often display behavioral traits that may indicate employee intent to commit fraud.
Companies should be aware of these traits and take steps to identify any suspicious behavior. This includes conducting background checks on new hires, monitoring employee activity, and having a system in place for employees to report any suspicious activity.
2.Establish Clear Policies and ProceduresOrganizations should establish clear policies and procedures for detecting, preventing, and responding to fraud. This includes setting up internal controls such as segregation of duties, dual authorization, and independent reviews. It also includes having a system in place for employees to report any suspicious activity.
3.Monitor TransactionsOrganizations should monitor transactions for any suspicious activity or discrepancies between internal records and external documents.
This includes comparing multiple data points and sources to detect trends, transactions, and suspicious events that might otherwise have gone unnoticed.