It seems that data breaches and other forms of fraud are becoming more and more common every day.
That’s why businesses are turning to technology to help them prevent and mitigate fraud in their operations.
According to a recent report from Merchant Savvy, instances of international fraud have almost tripled since 2011 and are set to cost up to 40.67 billion USD by 2027.
It’s bad enough that fraud exists in your industry, but it’s even worse when you’re one of the victims.
Businesses should be allocating resources to prevent it before they encounter any instances of fraud or have to pay out-of-pocket to recover from the damage it causes.
Fraud prevention has become critical to all businesses, as the number of cyber-attacks, scams, and identity thefts grows every year.
Fraud risk management is the key to preventing your company from losing money through fraud and other illegal activities by employees or clients.
To create an effective fraud risk management program, you must thoroughly identify the risks associated with the different areas of your business, strategize the most effective ways to prevent these risks, and measure your success in doing so after implementation.
It’s important to take every precaution possible in order to make sure that your business is as safe as possible.
Here are some of the best practices and strategies you can follow to keep your business safe from fraudsters and financial losses of any kind.
Without any further ado, let’s dive in!
1. Identify the type of fraud
Identify the type of fraud that poses the most risk to your organization at the moment.
There are many types of fraud, including identity theft, credit card fraud, healthcare fraud, insurance fraud and mortgage/loan fraud.
The key to preventing all of these forms of theft is to carefully monitor any personal information that could be used to commit them.
If you’ve been a victim of identity theft or another form of criminal activity it’s important that you report it immediately – sometimes certain companies will have policies that protect you if you’ve been a victim.
Fraud prevention doesn’t just fall on consumers though; businesses must also take precautions to prevent criminal activity from impacting their bottom line.
That includes taking extra steps when hiring new employees as well as ensuring they’re following best practices with existing workers.
In some cases the risk might also be from an aftereffect of inconsistent consumer spending or the impact of other weaker business in the industry, as happened with American Express. You can read all about it here.
Business fraud prevention often focuses on people within an organization who might try to steal money or property through fraudulent means.
This can include making off with cash register receipts, selling items without permission, charging customers for services they didn’t receive and padding expense reports.
To prevent fraud within an organization it’s crucial that employers understand how common workplace fraud is today as well as its impact on businesses overall.
2. Implement anti-fraud technologies in your organization
There are a number of anti-fraud technologies available that make it possible to protect your business, reputation, customers, and employees from fraud.
PayPal is a live example of the benefit of implementing technological products to increase stock value while moderating fraud risk for the company.
Here’s a look at some of these technologies that can help you implement best practices for fraud prevention:
- Two-Factor Authentication – Many services now require users to enter a second form of authentication (usually via text message) before they can log in or access sensitive information.
- Data Loss Prevention – This type of software makes sure sensitive data doesn’t leave your organization without authorization.
- Business Intelligence (BI) Analytics – BI analytics let companies analyze data across departments, helping them identify trends that might indicate fraud.
3. Draw up a fraud risk management guide for your business
Drawing up a fraud risk management guide is one of the most important tasks, which any business or organization should do in their day-to-day operations.
It is essentially a guide that all employees should work with, while conducting their usual business.
Fraud prevention has become a major concern among organizations today as one can never be sure what their employees are up to or if there are competitors out there trying to sabotage them.
It’s vital that you stay one step ahead of such frauds and draw up a fraud risk management guide. This loan fraud guide can help you get started with the basics.
This guide includes all major things you’ll need to keep your organization protected from fraud.
To make it effective, you have to ask yourself several questions including: What kinds of incidents have happened in our organization earlier? Are these repeated frequently? Fraudulent activities include anything illegal like theft, embezzlement, bribery etc.
It doesn’t matter whether it was committed by an employee or a supplier; fraud can put your company at serious risk of losing everything it has worked so hard for.
A business fraud risk management plan will help you reduce those risks significantly. You might think that keeping a check on cash transactions is enough but guess again!
There are plenty of ways through which fraudsters try to exploit loopholes in your system and steal money without being caught.
4. Opt for fraud insurance
If you want to make sure your employees are on their best behavior when it comes to fraud prevention, a business insurance policy is essential.
Although your plan may not cover personal fraud committed by your staff, many options do cover employee-related activities such as identity theft.
Look into the specifics of particular policies or stocks to determine if that’s an avenue worth exploring; a call to a trusted insurance agent can help you get started.
Of course, there are also other ways you can combat fraud at work, including financial statements and business reviews from third parties.
Don’t ignore these preventive measures.
They will keep your company safe while also protecting against financial losses should your office come under investigation by law enforcement or regulatory agencies.
The best strategy depends on factors such as size, cost constraints and other characteristics unique to each organization.
Let us know in the Comments section below which of the above mentioned fraud prevention strategies did you implement and how did you benefit from it.