Every business is vulnerable to fraud. However, small and medium-sized businesses are at a higher risk of fraud than larger organizations. There are numerous frauds and scams that a company can encounter—for example, cybersecurity, terrorist financing, improper payments, identity theft, money laundering, etc. It’s critical you implement fraud prevention techniques.
Fraud prevention has made numerous steps using machine learning, artificial intelligence, and high-performance analytics. Fraud affects every aspect of our lives. It squanders tax money, costs human lives, raises prices of goods, etc. Therefore, every organization ought to have fraud mitigation measures in place instead of recovering your losses after a fraud has taken place.
Fraud prevention involves strategies deployed to avert attempts to obtain property or money through deception. New technology is in play to predict tactics, uncover new schemes, and solve sophisticated organized fraud rings. It entails the application of predictive and adaptive analytic techniques. New techniques are combining real-time data and risk profile analysis to aid fraud mitigation.
Both businesses and governments have adopted fraud prevention. They use mechanisms like artificial intelligence and data visualization to avert the reputational and economic effects of fraud. Fraud mitigation applies to organizations of all types, locations, and sizes—for instance, banking, insurance, public sector, healthcare, etc.
Here are some measures you can take to prevent your business from fraud:
Create separate bank and credit accounts for your business and personal life. If hackers get one account, they won’t be able to access the other version. Look into your bank’s online security system to ensure the automatic logout feature is available. Come up with a closely monitored reimbursement policy for employee expenses.
If you provide credit cards to your employees, ensure the service provider has effective fraud prevention mechanisms in place. For example, automatic alerts in case an employee surpasses a set limit in expenditure. Lastly, handle your bills online to reduce the paperwork that could fall into the wrong hands.
When recruiting new employees, you must carry out a background check on potential candidates. Don’t rely only on referrals and existing work history. This will ensure you get workers who are not only qualified but also trustworthy.
You can outsource a company to help you run this check. When you get a list of finalists, you can run this background check before making the final decision. Ensure you get the necessary authorizations to run the background check.
Internal controls are schemes laid to protect your company’s assets, improve integrity in accounting records and deter fraud. Segregate duties to ensure a particular role is under a specific person. This will increase accountability and reveal any discrepancies.
Documentation also plays a crucial role in reducing fraud. Ensure all checks, purchase orders, and invoices are well labeled. You can also have reviews above a certain amount requiring two or more signatures. In addition, have your internal control programs revised to have the latest technological advances.
Ensure everyone within the organization is aware of the fraud policy and the consequences associated with them. This may deter employees from planning to carry out any fraud since the management is watching. Honest employees will also be aware of the signs of fraud and can raise the alarm.
Since most employees hesitate in reporting matters to their employer, set up an anonymous reporting system. Employees can report fraud through a plan with their identity hidden. This will encourage more employees to raise the alarm in case of any fraudulent activity.
Hackers are well vast in computer systems. A firewall can aid safeguards the company’s data, whereas antivirus software helps identify breaches in time. Get a cyber-security vendor to help you with a product that suits your needs.
Come up with a protocol that requires employees to set up strong passwords. Also, have the employees change their passwords every 60 to 90 days. In addition, back up your data daily or weekly and have the data stores offsite. In case of a breach, you can safely restore your data without much downtime for the company.
Interested in protecting your business from fraud to safeguard your bottom line? At Enformion, we use advanced analytic tools, a vast database of public information, and decades of expertise to help you with fraud prevention and mitigation. Start your free trial today to fight back against fraud.