Fraud Risk Assessments

Fraud Risk Assessment



Enterprise fraud risk assessments are essential components of holistic and comprehensive risk management programs. Yet, many companies are really lax in the identification and prevention of constantly changing fraud risks.

There aren’t many companies that plan to fail. However, quite a few companies fail to plan for major fraud events (MFE’s) and the results can be devastating.

Companies simply can’t throw random “darts at the board” and expect to successfully mitigate fraud. In today’s complex, and often changing fraud landscape, that simply won’t work.

While your company may hit the bullseye occasionally, more often than not businesses miss the risk target altogether. This explains why there are holes all over the wall next to dart boards. The player never came close to hitting the target.

Planning for Rapidly Changing Risk

Companies need to plan accordingly for the risk types they face, starting with a fraud risk assessment. Fraud risk assessments systematically identify and prioritize risks versus “throwing darts” and hoping you hit the right one.

The failure to timely detect changing risk environments significantly increases the odds of being targeted by global organized crime rings.

Fraud risk assessments are the foundation (Square One…Ground Zero) of effective anti-fraud programs and accomplish three things:

  1. Identify operational risk and vulnerability

  2. Predict the probability of occurrence

  3. Assess the organization’s ability to detect, manage and mitigate fraud risk.

Fraud risk assessments are also excellent tools for benchmarking the organization’s ability to protect data and reduce losses. To keep pace with the rapidly changing global crime landscape, fraud risk assessments should be conducted regularly, or ≤ 1 year.

The frequency of which risk assessments need to be conducted depends on the company’s risk appetite. However, some of the other mitigating factors include client demographics, industry trends, products, services, losses, and regulatory requirements, etc.

Enterprise fraud risk assessments are the critical first step in the fraud risk mitigation cycle. See “5 Reasons Why Enterprise Risk Management Programs Tank” and other related content in the Fraud Solutions Blog.

Fraud Solutions helps businesses prevent risk, reduce major fraud losses and improve operational ROI. For more information, contact us to schedule an initial consultation. No obligations…just unique insights from an industry leader.