Gain confidence in your fraud prevention and detection systems

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Fraud is a major issue for businesses across all industries, regardless of their size and industry in which they operate. The costs can be enormous (in extreme cases, even fatal) and include far more than the direct costs of any particular type of fraud. Companies must also deal with the knock-on and indirect effects, such as the cost of investigations and legal actions. The resulting reputational damage can also lead to unexpected costs, both from customers preferring a different company and an increased exposure to future attacks.

Fraud can happen in a very wide range of ways and be perpetrated by both external players and (whisper it) people you thought you could trust: your employees, suppliers and partners. With this wide field of activities, from procurement fraud through payments fraud to identity fraud, it is hard to keep up with the latest advancements in the fraud prevention industry. Even roundups, such as this one on payment fraud analytics, can only go so far to raise awareness and understanding.

Awareness of vulnerability

Many companies may feel that they could be vulnerable to fraud – either in general or towards certain types of fraud in particular. Often, they are not exactly aware of how they might be vulnerable, or how could they approach this subject in the most efficient way. Unfortunately, some businesses decide to put the bare minimum of precautions in place and hope for the best. However, this approach can reveal itself to be both expensive and harmful to the company’s reputation.

Even a small financial loss could be more than a business can afford to lose when economic times are tight. And the reputational damage can have far-reaching effects that reverberate for many months or even years. The question, therefore, is how do you know whether your anti-fraud precautions are good enough? The answer to this question lies in assessing your fraud maturity.

The question, therefore, is how do you know whether your anti-fraud precautions are good enough? The answer to this question lies in assessing your fraud maturity.

Assessing fraud maturity

A good fraud maturity assessment is both wide and deep – but not too wide and deep. You do not want to end up spending a year assessing your fraud prevention and detection status quo while fraudsters may attack at any time. You need to thoroughly document your current fraud detection and prevention activities and compare these with the landscape both within and beyond your organisation. Your assessment needs to identify the gaps and risks in your current fraud prevention strategy and provide a clear set of actions to move you from now to the ideal position, where you can manage all the key fraud risks at glance. Ideally, this process creates a clear business case to drive action across the organisation.

The fraud ecosystem

In practice, this means that you need to make a full 360-degree assessment of your company’s fraud detection and prevention system. You need to look at all your processes and systems and dig down into details to find potential vulnerabilities. You also need to look wider, at the whole fraud ecosystem – that is, the company culture, fraud mitigation techniques, products and processes.

This can have unexpected consequences. For example, a culture that places a lot of trust in its employees sounds great, but unfortunately, it is open to abuse. It is important to find the right balance between checks and precautions and an open culture of trust.

One way to carry out this assessment is through a series of workshops and interviews across the company. This builds a collaborative approach where everyone is working towards the same goal, which is to prevent fraud and, ultimately, prevent loss. Collaboration with external consultants can help to build even more confidence in the process and make it easier to discuss issues that might otherwise be taboo – important when dealing with fraud types such as procurement or internal fraud.

Finding a route to confidence

This type of collaborative process, whether run internally or with external consultants, can help you:

  • Understand and document the risks that were already known, but also identify hidden vulnerabilities.
  • Gain a clear line of sight of how you can move from where you are now to where you need to be. You will understand the steps that you need to take and what is the right order of those steps with consideration of the short, medium and long-term ratio of benefits and costs.
  • Become aware of how you can use cutting-edge fraud detection and prevention techniques, such as real-time screening and advanced analytics, while having the right information at hand to decide which of these tools are necessary for you, which would represent an upgrade to your current processes and which might potentially bring you a competitive advantage.
  • Finally, and perhaps most importantly, you will be able to have full confidence in your fraud management system and loss prevention landscape. Businesses need to know – and be able to demonstrate to their customers and other stakeholders – that they have taken all the necessary actions to protect themselves and others from fraud. A fraud maturity assessment will provide that reassurance and enable you to continue to operate with confidence.

SAS offers a Fraud Maturity Assessment in the EMEA region. Feel free to contact us to discuss a customized assessment plan.

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Katarina Garaiova

Katarina Garaiova has joined SAS early in 2019 and is currently working in the EMEA Fraud Strategy team from her base office in Vienna, Austria. She has joined from a company operating in the Financial Services, where she was Head of Fraud Department. Therefore, she has strong knowledge of fraud prevention and detection processes, combined with different fraud investigation strategies. By enforcing a zero-fraud tolerance policy, she supported submission of numerous police complaints and helped bring a number of fraudsters to justice. During her professional career before joining SAS, over more than 10 years, her focus has always been on Fraud, Internal Controls, Internal Audit, Process Improvement and Compliance.

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