How to Prevent Corporate Fraud and Corruption
Corporate fraud can cause financial and reputation damage as well as legal fees and fines. In fact, a typical organization loses 5 percent of its revenue to fraud each year. Strong internal controls and a culture of ethics and integrity are key elements to help detect and prevent fraud.
Enforcement actions for bribery, fraud and corruption are at an all-time high. Fraud is hard to detect and often causes more than just financial damage. Despite this, many organizations do not have a formal program in place to address fraud. It’s easier and less expensive to implement prevention and detection techniques than to recover losses once they’ve occurred.
Your risk and compliance program should ensure employees fully understand what constitutes fraud and have the tools to report it when it occurs. Your employees are your first line of defense, and are often aware of unethical business practices and corporate corruption. A fully integrated, risk-based system that includes policies, training, open lines of communication and third party risk management can help your organization mitigate the risk of fraud.