As the economic climate worsens, there are increasing signs that fraud, theft and other crimes against business will continue to rise and indeed intensify – and it is not just retailers on the High Street who will be impacted, says PricewaterhouseCoopers LLP.
While all organisations have their attention focused on weathering the current economic storm, the firm’s forensic services specialists warn that in these tough conditions it is all too easy to miss internal fraudulent activity in businesses across all sectors.
There are an increasing number of reports of high profile organisations in non-retail sectors suffering from staff frauds – a trend experienced during the last UK recession. Such incidents can cause significant direct financial loss as well as significant brand or reputational damage.
Neal Ysart, forensic services, PricewaterhouseCoopers LLP, said,
“We know from previous recessions that internal fraud is more likely to surface as economic conditions tighten. It is important that businesses take steps now to counteract any potential for incidents to arise. Focusing on corporate survival is paramount. However, failing to effectively manage the threat of dishonest insiders could lead to a very unpleasant time for everyone concerned.”
Companies should identify those activities management classify as internal fraud, which can range from misappropriation of assets, ‘fiddling’ expenses or stealing sensitive customer data to far subtler frauds such as misrepresenting performance figures to help achieve better bonus payments or embellishing a CV to increase the chances of employment.
Businesses should also consider flexing their internal fraud controls to take account of seasonal and economic factors. For example, additional management checks could be put in place in high risk areas such as expenses or other areas of expenditure. If redundancies are likely to be made in organisations that hold valuable customer data, management should consider additional monitoring controls and exit screening.
These actions may act to deter potentially disgruntled employees from accessing data and then inappropriately sharing that data either internally or externally. At the start of the employee lifecycle, pre-employment screening may also help identify potential candidates who have, for example, embellished their CV.
www.pwc.co.uk
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