Fraud is like Underwear – It changes daily

Fraud Changes

Fraud Change

Recently, I was asked by an Editor to write an article on improving the effectiveness of audit and investigative teams. Certainly, much has been written on ways to improve these functional areas in the corporate environment. That fact complicated the writing challenge for me but it wasn’t an impossible task when I stopped to change my mindset and think about it differently.

What Have You Done Lately?

Likewise, in the fraud risk management environment, it’s easy to get a severe case of “tunnel vision” as companies focus on a particular technique or approach to prevent fraud and reduce risk often forsaking all others. Nothing is guaranteed and varying degrees of risk mitigation success are obtained with individual efforts which can easily stagnate over time absent an infusion of new ideas.

Like my writing, the key to success in the anti-fraud and risk mitigation battle is not to “rest on your laurels” as that’s yesterday’s news. Status quo and “how we’ve always done it” simply doesn’t work with the constantly changing fraud landscape. The key to success involves finding different ways (change) to think about the fraud risk problems of today and tomorrow. Why? That’s what your adversaries (criminals) are doing.

Certainly, businesses have to address current vulnerabilities to reduce risk and financial exposure. However, limiting yourself to today’s fraud problems is short sided as it only addresses current frauds. Fraud is evolving so quickly that for businesses to be effective they have to change with it.

Fraud change management involves tracking the problem, identifying trends, gathering intelligence and working on ways to prevent future fraud before it occurs. I.e. get there before the bad actors do.

Absent regular change, corporate fraud risk mitigation efforts will always be “behind the 8 ball” which is a losing proposition.

Talking About It

Part of the audit and investigations piece I wrote focused on changing the communication paradigm which is critical to doing things differently and getting out in front. I highlighted the communication issue because the anti-fraud dialog at most companies is severely lacking. It isn’t an effective, two-way, or insightful information sharing process.

The lack of communication also highlights a related problem which exists in many companies and that’s the existence of work unit silos where departments don’t interact with each other. It’s an “us vs. them” mentality. Changing the communication paradigm relies on the principle that open, honest and timely communication are foundationally important to fighting fraud, increased ROI and bottom line profits.

Rocket Science?

Make no mistake about it, fraud can be complicated. However, one of the themes in the article I wrote addressed the fact that many risk mitigation programs are more complicated than they have to be. Thinking of fraud in an overly complex manner only adds to the challenge, confuses your employee’s and usually ends badly.

While having people who “get it intellectually” is certainly a plus, one doesn’t have to be a rocket scientist to implement holistic, functional, fraud risk management programs. So, change the mindset. Break the effort down into simplistic, easy to understand concepts that are easy for the enterprise to get their arms around.

The Final Word

I’m often talking about holistic anti-fraud efforts which involve many parts effectively working together. While holism is an imperative part of the battle, one of the critical parts of solving fraud risk problems involves changing your approach as fraud changes over time.

The Knights at your Fraud Roundtable should be talking about the evolving fraud risk issues facing your company and how you can attack the problem differently than you have in the past. Everything else flows from that communication.

Simply put, just because your company’s “always done it that way” doesn’t mean it’s still the way it should be done right now. Times, and financial crimes, are changing…what are you going to do differently as a result?

Those are my insights. What are yours?