Fraud happens. It happens to organizations of all sizes and across every industry. It happens even to the best of organizations. And in almost every instance, organizations hit by occupational fraud say they never dreamed it would happen to them.
Thanks to research and reporting, we understand much about how fraud is committed and how it can be prevented and identified. Despite this, many organizations fail to implement proven anti-fraud measures like hotlines for the simple reason that they don’t feel it’s necessary.
Do any of these justifications against implementing a hotline or some other anti-fraud effort sound familiar?
“We trust our employees.”
“Our employees have been with us a long time and would never do that; they’re like family.”
“We don’t need a hotline; we have an open-door policy.”
“Our nonprofit’s mission in the community protects us from being targeted for fraud.”
Professionals who work in the field of fraud deterrence and detection hear examples of this rationale far too often. Although the explanations sound great on the surface and typically come from well-meaning organizations, sadly, the “logic” is seriously flawed and ineffective
at managing risk or preventing fraud.
Here are six frequently used justifications for not recognizing fraud risks and implementing sound risk management practices, and explanations as to why they represent misguided thinking.
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Length: 2 pages (PDF 89 kB)