According to a survey conducted by credit bureau Experian, almost three-quarters of businesses (72 per cent) cited fraud as a growing concern, and nearly two-thirds (63 per cent) reported the same or higher levels of fraudulent losses over the previous 12 month period.
It isn’t just big businesses that are being targeted ether. The Association of Certified Fraud Examiners (ACFE) says that small businesses lost almost twice as much money per year compared to larger organisations.
So how can you effectively protect your business from fraud in a world where its becoming increasingly common and destructive. Here are five approaches:
If you currently have no form of fraud prevention policy, make sure that your most important documents and data are backed-up immediately. That way, while you’re in the process of implementing tougher security measures, you’ll still be able to recover information should fraudulent activity occur.
"Companies with secure and reliable backups won't lose their data," says attorney and ACFE research specialist Ron Cresswell. "Ransomware attacks have been on the rise recently. The best defence against ransomware is to regularly backup all critical data."
With most instances of fraud now taking place online, every business must have watertight computer security, which includes a firewall to protect company data and antivirus software to detect breaches.
Along with setting up strict protocols that require employees to create difficult-to-decipher passwords, you should also educate and train members of staff on how to be safe online. To give an example, not clicking a phishing scheme link within a secure-looking email.
Even though stories of online identity theft and data breaches dominate the news, many fraudsters continue to pursue more traditional means of theft. For instance, check fraud remains a serious concern for many businesses.
Therefore, it makes perfect sense to implement an effective fraud prevention plan for payments, which includes using secure checks. This will help you understand when fraud occurs, respond quickly to prevent additional losses, and work with the bank to recover funds.
It's not nice to think about, but your own workforce could be the source of fraudulent activity. Thankfully, there are several ways to help prevent and mitigate the effects of internal fraud, starting with separating employee duties.
"If there's a separation of duties, the task requires more than one person to complete it," Cresswell says. "One employee should not have the power to approve payments and write checks. Those duties should be divided among two or more employees, so there are several people involved in every payment."
This might seem like an unnecessary and time-consuming exercise, but if audits mean stopping instances of fraud sooner rather than later, it will be well worthwhile in the long-run. After all, both external and internal audits could uncover irregularities in the books that point to fraud, as Cresswell explains:
“An employee who works in purchasing might steer a contract to a vendor that is owned by the employee's family member. Another common type of fraud among small businesses is billing schemes, including submitting invoices for fictitious goods or services, submitting invoices for personal purchases or submitting inflated invoices."