Fraud is not a new term in the business world, it has been there for a long time. And it definitely has evolved over time in terms of the different manners it’s conducted in. Especially with the development of technology, e-commerce fraud prevention strategies have become a must for all online retailers.
Nevertheless, fraud does not exclude and it can appear in all companies big or small, successful or not, online or traditional. But with a slight difference. Facts show that small businesses are more prone to fraud due to weak internal controls, low morale, and the general fact that they are less likely to invest time and energy in fraud prevention.
Regardless of what category your business falls into there are some general tactics that can be applied to most of the corporate world with the end result being mapping, preventing, and dealing with fraudulent behavior.
Tips and tricks for managing fraud in the workplace
Being part of the management team of any type of company carries a lot of responsibilities. One of the most important ones is to learn to manage fraud risk. Not an easy task to accomplish, but it’s achievable once you start thinking about it as an inevitable part of your job description and everyday work life.
So here we’ve managed to put up a list of the most important and easily applicable tips to start implementing fraud prevention in the workplace.
Be aware of who your employees are
Knowing your employees starts with a quality recruitment process and a good hiring team. A thorough background check of the applicants is required in order to know who is entering your company. Solid evidence of the newcomers’ history makes it easier to set up the environment for them.
It’s not that quality new employees can’t trick you, it’s just that fraud chances are reduced by implementing a well-founded hiring procedure.
It’s also essential to create and maintain a close professional relationship with all new or existing employees. Trust is something that goes both ways and in order to be transparent, employees must feel the same reflected by the company’s management.
The tone of the relationship between CEOs and employees is usually set by the authority and the employees simply follow their lead. So, how much you know or get to know your employees usually depends on the way you as a manager lead the way.
Knowing your people not only professionally but also a little bit privately will tell you a great deal about themselves and their characteristic traits. A change in attitude or behavior can be a clue that something is going on.
Also, an underlying reason for conducting any kind of fraud or showing misbehavior can be the feeling of rejection or resentment by the manager. That’s why a good connection with employees can prevent this.
Engaging everybody in conversation builds up your knowledge of people’s behavior and increases your instinct of knowing when somebody is lying.
Of course, there is a thin line between building a healthy work environment with professional trusting relations and becoming too close with everybody and losing the respect and authority your job entails.
Create a prevention plan and activities
Set up a visible and transparent fraud prevention plan that will be very well-known and talked about. Making your employees aware that you’re well acquainted with fraud in all of its forms and taking measures to prevent and deal with it might just be what will deter them from committing a fraudulent action.
This prevention plan should consist of several steps all of which will involve the employees as well:
- Set up a fraud prevention team
Get your employees involved and set up a team that consists of both very reliable workers and some with a characteristic that maybe throws you off. Having different kinds of people involved in the prevention policy creation gives them a sense of responsibility and makes them less likely to be involved in any form of fraud. This team will be responsible for all further steps taken by the company in this field.
- Organize training and hold employees accountable
This is something that the fraud prevention teams should come up with. But you as a manager will very likely be a part of that team and can suggest it.
Regular training should include what fraud is, what forms it can take, and what consequences arise from it.
Mandatory presence should be required and employees should even be asked to sign a certain form as evidence that they have participated in the training. This will hold them accountable and will serve as proof that they’ve been informed of the actions the company is taking regarding fraud.
It also shows that the company is serious about the matter and is very alert to this type of behavior.
- Make visible signs and materials
Setting up informative signs or symbols shows that the company is very open to talking about the topic. They should be displayed publicly and should be something the employees are used to.
Leaflets, pamphlets, and other types of printed or electronic material should also be distributed from time to time. You want your employees to know that you’re ready to prevent and deal with fraud, but you don’t want them to be overwhelmed by the topic and throw them off.
Hopefully, all of these actions will deter employees who’ve set up their minds to fraudulent behavior. Also, they will keep the other honest employees informed on how to detect this type of behavior.
If the business is run online and e-commerce fraud is involved, a different approach to the prevention plan and activities must be taken into consideration.
Make regular time-offs mandatory
Although it might sound weird or not like something a manager would ask from their employees, taking days off and vacation should definitely be mandatory for everyone.
It might look like the employees that never take a day off and never want to be absent from work are your best and most dedicated people, but think twice.
It’s very common that those employees are hiding something and are afraid of being caught if they’re not there physically.
So sometimes it’s nice to have certain people out of the office and have somebody else cover for them. Certain aspects of their work arise in this way.
It’s also a good strategy for the overall satisfaction of employees and resetting their working mindset after a break.
Delegate and divide tasks
Having one person responsible for a whole process is usually not a good idea, regardless of how good they are at what they do.
By dividing the processes into smaller tasks that can be managed by different people, you are lowering the risk of something going wrong without anyone noticing.
For instance, if there is a procurement to be conducted, there should be
- the respective team to prepare the right documentation
- a procurement team to actually conduct and buy the product or service
- a third team to oversee any problems and actually handle payment.
It might sound like unnecessarily overcomplicating things but it definitely helps to keep things safer and more transparent. This shouldn’t be done all the time and for every action. But implementing it just the right amount and for the more serious tasks will have the effect needed.
Set up regular internal controls and reporting systems
Regular internal controls are an advantage for lots of reasons. Detecting and preventing fraudulent behavior is just one of them.
Audits are best and most effective when they’re not scheduled and unannounced. Random check-ups and reports will detect any vulnerable spots in the workflow and will improve the company’s success not only in terms of fraud detection.
They set up the tone of the company which should be that work is not overly micromanaged and overly controlled, but also that no wrongdoing goes undetected and fraud alertness is in place.
So what happens when other employees actually do detect something suspicious? It’s not their responsibility to deal with it or take measures against it. They simply recognize fraudulent activities and report them. But when and how do they report them?
Having an anonymous reporting system is the best idea. This gives everybody the freedom and the safe space to report suspicious activity without being judged or ruining a relationship with a colleague.
There are various online methods to do this anonymously and without any risk for both parties involved.
Hope you feel prepared now
We hope that what we have prepared for you as a list of tips will help you feel ready to tackle this issue of fraud detection and prevention. It’s an essential part of running your business safely and securely. All of the above-mentioned methods should equip you with the most important practices to start thinking about fraud prevention and making it a part of your daily working culture.
Iskra Stojanovska has been an English teacher for more than 13 years now. She is also a freelance translator, interpreter, and university professor for both. She’s currently looking for a career change and other ways in which she can make use of her knowledge of English.
Content writing is a definite choice.
