Many organizations like yours are looking for a comprehensive approach to managing risk. We’re at a time when digital fraudsters seem to be one step ahead of the best fraud detection models.
There is no need to search any further.
This search is not without reason, as it is estimated that a company loses up to 5% of its net revenue to fraud. If you calculate your gross revenue for an entire year, you will realize that losing that much money is unthinkable. That’s why we’re here.
Fraud prevention involves identifying the potential risks inherent in your business activities. The idea is to help you develop a program to detect and prevent suspected fraud both internally and externally.
Today, we’ll look at 6 techniques that will help you armor your business and avoid the irreparable losses that fraud can cause in the future. With techniques that represent a gain, it will no longer be necessary to think about losses.
Ready to jump in the deep end with us? Now we can begin!
Top 6 fraud management key techniques
1. Get started with social media
We start from the outside in. Social media profiles can also be used in detecting fraud in your organization. It’s a great communication bridge to your customers, employees, and investors to:
- Monitor conversations: it’s all about keeping an eye on the conversations taking place on social networks. You can use monitoring tools to search for keywords related to your company, products or services
- Communicate useful and relevant information about your company and products: so your customers know what to expect from you and be more likely to report suspicious activity
- Create an active community: encourage your followers to participate in your social profiles and create an environment where they can share their experiences and opinions. This way, they can help each other detect and prevent fraud
- Educate your customers: use your social profiles to share information about the types of scams that can affect your customers and how they can avoid them. You can also offer tips on how to protect personal and financial information
After gathering information and identifying something unusual, determine who is responsible for handling the situation, how to act, and what steps to take. Be sure to communicate this technique to your employees and trusted customers.
2. Preventing fraud exposure
As a business owner, you know that fraud prevention is critical to your company’s success. Social media is a good start, but now you’ll need to go deeper into the business internally.
Implementing key measures can be a very effective strategy to stop fraud in its early stages and protect everything before it happens. We’re talking about implementing:
- Rigorous identity verification: of everyone who interacts with your business, whether it’s a customer registering on your website or a new employee or vendor joining your organization
- Multi-factor identity management technology: a powerful tool to ensure that everyone is who they say they are, and to prevent business interactions with the wrong people
Prevention is an ongoing task and must be reviewed frequently as the risk environment changes. To ensure effectiveness, it is critical that everyone in your organization understands the full intent of the strategy and that the management team is diligent in implementing and creating policies.
3. Assess the vulnerability of your business
The next technique is to understand the areas in which your organization is vulnerable. Performing a detailed assessment will help you analyze the risks based on:
- Depth of complexity
- Range of services affected
- Specific geographic exposure
The assessment examines all types of risks, the likelihood of their occurrence, and the cost associated with each, starting with people.
The idea is to have a comprehensive understanding of how employees interact with the organization’s resources on a daily basis. The benefits and opportunities provided by the organization can often become the source of internal fraud.
Management should evaluate communication tactics and system implementation. Keep in mind that risk can also be found externally, especially when working with large amounts of data or complex networks.
From here, a risk tolerance limit is used to create a cost-effective structure and is the maximum amount you would be willing to lose.
This limit is useful because it makes risk assessment quantifiable and provides a foundation on which to build your strategy. It allows you to pay more attention to risks that are above the limit and therefore more damaging in the long run.
4. On-the-spot fraud detection
On a day-to-day basis, fraud prevention and detection go hand in hand.
To ensure the integrity and transparency of internal operations, it is important to follow this protocol:
- Cyber controls: these can be installed at various levels of the organization, from network configuration to internal communications software. It is essential that your team understands how these controls work and when to assess them to ensure they are being used properly
- Appropriate use of sustainable technology and information security protocols: so that all employees are aware of best practices
- Detailed briefings: these can identify anomalies and suspicious behavior and, to be effective, must include detailed information such as the date and time of personnel actions and movements. It is important that these reports are properly stored and available for analysis at any time
- Incident reporting: if your team detects potential fraud, it is critical that there is an easy way to report it. Implement a rapid communication process to protect sensitive employee and customer information
The idea is to detect and act on the spot. An established protocol will help any team member who notices something out of the ordinary to take quick and concrete action.
5. Creating a standardized protocol
The entire process outlined above should become an integral part of your organization’s culture. Now, a robust fraud management protocol solution is likely to include:
- A clear strategy for senior management and a fraud risk manager to raise awareness and enforce compliance requirements
- Delegation of responsibilities with specific job descriptions
- Well-designed reporting and whistleblowing procedures
- Internal audit and quality control procedures
- A description of the investigation process and corrective actions
- Fraud awareness tools and techniques
- Research and analysis of fraud mitigation and prevention technologies on the market
In addition, these technologies should be documented, shared, and made available to all team members. The best strategy for a standardized and effective protocol is to designate one person to be responsible for the entire fraud risk management program.
All communications will go through this person or team, and they will be responsible for training, monitoring and making adjustments as needed.
6. Quantifying effectiveness of anti-fraud protocol
Maintaining an optimal anti-fraud protocol over time is an evolving process. These first four principles should be monitored and reported on frequently.
The only way to make a fraud management solution work is to measure it against them:
- Numerical successes
- Diagnosed blind spots and a cost-benefit analysis
- Areas or departments that need to be improved on a regular basis
Quantify the results of the current strategy and communicate the results transparently to all relevant stakeholders. Let teams know when assessments will be conducted and exactly what will be monitored.
In addition, legal rights should be subject to frequent review to ensure compliance with current laws and regulations.
Diagnose, detect and suppress
There are several techniques that can be used in your organization to prevent fraud in day-to-day operations.
Using social media, preventing fraud exposure, assessing the organization’s vulnerability, detecting fraud in the field, and creating a standardized protocol are key techniques that must be used together to maximize the effectiveness of the strategy.
It is important to understand that anti-fraud is an ongoing process and must be addressed in all areas of the organization. This requires a strong commitment from top management and all employees of the company to create a sustainable culture over time and to reap the benefits:
- Social media: as a useful tool for early detection of suspicious activity and to educate your customers about the types of fraud that may affect them and how to avoid them
- Prevention: to stop fraud in its early stages and protect the company before it happens. Rigorous identity verification and the proper use of technology and information security protocols are effective techniques
- Detailed vulnerability assessment: to identify potential risks and anomalies and take steps to correct them
- Establish a standardized protocol: to ensure that all of the above techniques are used properly and consistently throughout the organization
All of this requires a combination of techniques and a company-wide commitment to ensure the protection of customers and the integrity of the company’s operations. If you’ve come this far with that commitment, you’ll run right back with the best techniques.
Guillermo is a Venezuelan SEO content writer currently living between Uruguay and Argentina. He is currently a head content writer for Skale. His articles have reached more than two million people across the Americas. He is a firm believer in love, dulce de leche and Kelly Clarkson.