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Don’t Let Anyone Pull the Wool Over Your Eyes
Did you know that your small business is at risk from fraud? While many companies think they’re too small to be targeted, your size could actually be a draw card for criminals. The good news is that you can protect yourself, and we’re going to show you how.
Fraud comes in many shapes and sizes, but the ultimate goal is usually about money. Someone who is trying to defraud you wants your money, and they don’t want to get it the legal way. Instead, they’ll lie, cheat or try and cheat you out of your business’s hard-won cash.
Cybercrime is the second most frequently reported type of fraud, according to PwC’s 2018 Global Economic Crime Survey.
How fraud places business at risk
There are both internal and external fraud dangers for all businesses. These include:
- Employee and customer/supplier fraud
- Business risks from external threats, such as cyberattacks.
Your business is never too small to have a plan in place for preventing fraud. After all, it’s much easier to guard against fraudulent activity than it is to recover losses suffered after the crime has been committed.
Internal fraud business risks
On average, the typical business loses 5% of its annual revenue to employee fraud.
You can combat this risk by:
- Rotating employee duties in the business, where possible
- When fresh eyes deal with the cash register or the financial books every once in a while, it’s easier to identify discrepancies.
“Many fraud incidents are initially discovered by accident, perhaps as a result of an audit, job change or resignation,” says David Clements, director, Forensic and Dispute Services, Deloitte Corporate Finance.
“Very few frauds are discovered as part of a deliberate attempt to uncover fraud, as very few organisations implement a proactive fraud detection programme.”
According to Deloitte, your Fraud Response Plan should contain the following:
- Purpose of the plan
- Policy statement
- Definition of fraud
- Roles and responsibilities including fraud response team
- Objectives including civil and criminal response
- Reporting of suspicions and collection and preservation of evidence.
What is Fidelity insurance and when would you need it?
Fidelity cover is a type of business fraud insurance that protects your business against losses suffered as a result of fraud or theft by an employee, or anyone involved in carrying out the crime, including external parties.
Protecting yourself and your business
Ultimately, we’re all at risk of fraud, in both our businesses and our personal lives. The good news is that if you’re proactive and you put the right systems and processes in place, it will be that much harder for a fraudster to pull the wool over your eyes.