Monday, September 29, 2008
Corporate Fraud Risks Are On The Rise
In its recently released 2008 Global Fraud Report, The Economist Intelligence Unit and Kroll stated that corporations are reporting an overall 22% increase in fraud in 2008 as compared to a similar survey conducted in 2007. The report noted that weakened internal controls and high staff turnover were the leading cause of the fraud increase. The average company in the survey lost more than $8 million due to fraud at some point during the last three years. Can your company afford these fraud risks and the potential impact on other areas such as public image, reputation and the resulting impact on shareholder return? Share your thoughts below. Also, to read more about this compelling report, click here.
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The increase in fraud is as disturbing as the lack of knowledge most leaders have about how to reduce it. There are no panaceas, but human misrepresentation can be measured at the time a person is hired; and work environment (culture, climate) also affects the likelihood of fraud.
ReplyDeleteSophisticated firms mitigate this risk by using pre-hire selection tools (e.g. conscientiosuness) that predict both good performance and fradulent behavior. They also use periodic culture/climate surveys, using modern human measurement methods to better assess, and then mitigate cultures that are transparent and reduce the probability of fraud.
scientificleader,
ReplyDeleteI certainly agree that preventing fraud from walking in the door is the best defense.
Thanks for sharing your perspective!
WA