Fraud Risk Cocktails: Lethal Consequences

Fraud Risk

Fraud Risk

The global fraud risk threats companies face today are specific. Perhaps more importantly, fraud threats are varied in their complexity, scope and sophistication.

Combine that with the regularity and frequency of the efforts perpetrated against companies and you have a potent, and potentially lethal, fraud risk cocktail.

Fraud risk, like alcohol, affects all companies differently. The commonality, however, is that while individual tolerances are different, over time the effect, and end results, of alcohol and risk, are exactly the same.

Alcohol affects your body’s vital organs which can be life threatening. Individual alcohol abuse has also been found to be deadly. Likewise, a series of major fraud risk events affects your company’s overall operations and financial health as well the potential for immediate or long-term business demise.

The parallels, and impact, between alcohol on the body and fraud risk on the business are eerily similar.

Plan To Drink

To negate the potentially harmful effects alcohol may have on the body, avoid serious health issues or get a DUI, drinking like anything else requires a plan.

Some of the considerations are: where are you going, who are you going to be with, what are you eating in advance (are you drinking on an empty stomach?), what are you drinking, how many drinks are you going to have, over what period of time, are you mixing alcohol types, are you taking any medications which would interact negatively with alcohol and how are you getting home (do you have a designated driver?).

People who think through this equation in advance, and successfully plan for a social evening out, lessen the likelihood of a serious physical event occurring to them. While this isn’t always a foolproof approach (variables change over time), generally it’s the key to successfully navigating social events and remaining healthy.

Unfortunately, where alcohol’s involved, many people fail to thoroughly plan their evening and this increases the likelihood of a serious, life threatening situation. The correlation between this and a major fraud event are unmistakable.

Throwing Darts

Like the analogy to social drinking, mitigating the harmful, and often fatal, financial effects of fraud requires a well thought out fraud risk management plan. Successful fraud mitigation cannot be a spontaneous act it requires advanced thought, preparation, training, technology and communication.

The opposite of a well thought out plan is a random one. Random fraud preparation is like throwing darts: the goal is to hit the bull’s-eye. However, more often than not unskilled players, who have not practiced regularly, find their dart ends up somewhere else on the board.

Thus, the odds of winning the game are greatly diminished. Worse yet, the dart doesn’t even hit the target and ends up on the wall next to the dart board.

Don’t like the fraud-dart-alcohol analogy? Think that’s far-fetched? Not so fast…like the alcoholic beverage industry, even darts are regulated. Who knew?

The Last Word

There aren’t many companies that plan to fail. However, there are quite a few companies that certainly fail to plan for fraud risk accordingly and the result can be devastating.

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

Like social drinking, companies need to plan accordingly for fraud. This starts with a complex fraud risk assessment to identify and prioritize fraud risks versus just “throwing darts” and hoping you hit the right one.

While the odds are that your company may hit the center of the target occasionally, more often than not, businesses miss the board altogether explaining why there are holes all over the wall next to dart boards.

For more information on how we can help your businesses prevent risk, reduce major fraud losses and improve operational ROI, contact us to schedule an initial consultation. No obligations…just unique insights from an industry leader.