Article
Written by Colm Hebblethwaite
Posted on 16/08/2019

Empowering your employees to detect commercial fraud - Your best line of defence

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Tackling fraud appears to be climbing up the agenda for global businesses. 42% of respondents in a 2018 PwC survey said their companies had increased spending on fraud prevention, up from 36% respondents just two years earlier. But PwC raises an interesting question – how is this money being spent?

It’s believed that businesses are increasingly arming themselves with crime prevention technology. Although these tools can build stronger shields, perhaps the best defence is being ignored.

As we’ve mentioned in previous articles in this series, your team can play a major part in detecting fraud and stopping it before disaster strikes. They’re often the people targeted by criminals for information and they are likely to be the first to spot misconduct within your organisation.

In this final article, we’ll take a look at the ways to create a vigilant workforce and environment.

Empower with responsibility

Your company culture has a part to play in fraud prevention. Making people feel somewhat responsible for protecting your business not only boosts vigilance but also motivation. They’re more likely to react when they notice something suspicious if they know it’s part of their job.

In the 2018, PwC Global Economic Crime and Fraud Survey, preventing fraud was highlighted as a core business issue. It has moved up the scale of importance because of how fraud and its impacts have grown, thanks to evolving technology.

Employees should feel empowered by the part they’ll play in this key business objective. Rather than adding more tasks on their to-do lists, you can explain how you’re bringing everyone into your central operations – it’s much more inspiring.

Your team should also be educated in how commercial fraud affects them personally. It’s understandable why many employees turn a blind eye when they believe fraud isn’t anything to do with them. But would they do the same if they recognised how losses caused by fraud could also affect not only their bonuses, but also ultimately their salary if the fraud was a large one?

Running an ethical business

People feel motivated by ‘doing good’, and this is something you can instil in your company culture to help prevent fraud.

Employees need to feel confident they’re doing the right thing when reporting fraud. The Enron case is a good point of reference here.

Whistleblower Sherron Watkins was named one of Time’s People of the Year for highlighting misconduct. The company had kept large debts off the balance sheets and Watkins warned the founder of how the concealment could impact the company’s reputation. She was ignored so she went public with her findings. Enron later collapsed following the scandal.

Watkins is praised for acting on her conscience, and other companies could learn from this example. Had Enron run a more ethical business, Watkins’ warnings could have been taken on board to prevent collapse and reputation failure. Remember, dissatisfaction at work can also lead employees to commit fraud.

Creating an ethical environment will encourage your team to speak out against fraud – whether they spot misconduct in your business or notice suspicious activity from an external criminal.

Influential training is worth the investment

As we mentioned in our article on getting external support, training is an effective way of highlighting the importance of fraud prevention within your business. Professional trainers can explain the dangers of fraud and why your employees need to be vigilant without scaremongering or threatening. This tone is essential for training that has an impact.

A good professional fraud prevention trainer will use case studies and possible examples to show how scams can affect your business and your employees’ day-to-day jobs. Making the training relevant is central to its long-lasting impact. Unless your employees know what fraud looks like in their daily work, how will they identify it?

Every job role in your business is different, so you should tailor your training accordingly. For example, your marketing team may benefit from learning about publishing and advertising scams, whereas your accounts department needs to be aware of invoice scams. Show them what to look out for and what to do if they notice anything that rings alarm bells.  

Have a clear procedure in place

For a matter so important, fraud prevention needs a clear procedure for everyone to follow. Your employees should know exactly what to do when something suspicious happens.

Criminals often infiltrate your business by causing panic. They may hassle your staff for information, hiding behind fictious legal or regulatory legitimacy to pressure people into giving them what they want. Another tactic could be to bully or guilt your staff into paying a questionable invoice before they’ve had time to double check if it’s valid. It’s important your team feel well supported to tell you about any issues. If they’re concerned about being punished for giving information away, they may keep it quiet and leave your business open to danger.

Empower employees to speak up but remove the pressure by outlining exactly what they need to do. This procedure also helps to minimise impacts if your business is hit by a scam.

You should outline how to preserve evidence, try to recover funds (if necessary), contact the police and if necessary, prepare responses to media questions. Deutsche Bank, for example, has been forced to cut 7,000 jobs to date, with 15,000 more set for the chopping block in the next few months, following its Russian mirror trades scandal. Its share price also dipped below €6 in June of this year, showing its damaged reputation continues to haunt the troubled bank. Various people within your business will be responsible for these different steps. Make sure everyone understands what to do and give them a copy of their procedure to refer back to.

Champion whistleblowing

In the previous article in this series, we highlighted that only 8% of fraud cases were reported last year. It’s understandable why people are afraid to speak out. Two teachers at a boarding school lost their jobs after drawing attention to manipulated exam grades. Although they blew the whistle because they felt it was unfair on the pupils, they have been punished.

MPs and peers have called for a review of laws surrounding whistleblowing, and businesses should be encouraged to do the same. Whistleblowing isn’t just used to speak out against a company. It’s also a way for someone to raise the alarm if they believe another employee could be committing fraud, which could cost the business thousands of pounds.

Work with your employees to encourage them to be open with you if they notice something strange in a peer’s behaviour. Most workers are protected by law if they ‘blow the whistle’ about wrongdoing, which could be a good way to open your discussion.

Your HR department should work to protect employees who do report any misconduct. A strong procedure will be essential help here. Outline the steps to raise a matter and what you will do to prevent any harm or harassment happening to employees.

Our commercial fraud series

This article concludes our series on commercial fraud and its impact on businesses and employees. We’ve discussed common types of fraud, ways to prevent it and how your employees are a key part in the puzzle for stopping crime.

If you would like any further insights or guidance on protecting your business against fraud, contact us today.