The typical organisation loses 5% of revenues each year to fraud, and if applied to the 2013 estimated Global World Product, translates to a potential projected global loss of nearly $3.7 trillion, according to the 2014 Global Fraud Study.

 

Fraud is everywhere, has no discrimination, and no entity no matter the size is immune to fraud.  Occupational frauds are generally insider fraud, where a person defrauds his or her employing organisation. By its very nature, this form of fraud is a threat to all organisations that employ individuals to perform their business function. Most often this type of fraud takes the form of asset misappropriation, procurement fraud and human resources fraud.

 

With losses below $100000 , South Africa ranks lower than the global average, however in losses between $100000 and $100 million, South Africa ranks the highest. 77% of all insider fraud is committed by senior management at 41% - more than double the global average which is 20% - and middle management at 36%.  The typical culprit is aged between 31 and 40, has a tertiary education, and has been with the company for 10 years or more. Organisations are targeted more by external vendors and less by their customers than their global counterparts, and agents and intermediaries have become significantly more involved in committing fraud against their principals. 

 

Because concealment is an intrinsic component of most fraud schemes, there are some frauds that are never uncovered, further, of the cases that are detected many are never measured or reported. Most frauds carry substantial indirect costs, including lost productivity, reputational damage, and the related loss of business, as well as costs associated with investigation and remediation of the issues that allowed them to occur.

 

“ In order to combat the threat of insider Fraud, you require a multi-tiered approach, starting with a Fraud Risk Management program and have a clear understanding of what you require from a continuous enterprise monitoring solution , Data Analytics and GRC review,” Says William Despard, Partner Integration Services at 4Di Privaca. 

 

Proactive detection methods are vital in catching fraud, and ongoing employee monitoring and an understanding of the risk factors and warnings signs of fraud are much more likely to identify fraud than pre-employment screening.  Most fraudsters will exhibit traits that can be warning signs; managers, employees, auditors and others should be trained to recognise these warning signs. That combined with other factors, may indicate fraud.