Reduce the Impact of Fraud With An Anonymous Whistleblowing Program
One would like to believe that most employees are hard-working and honest, wishing the best for their families, colleagues and communities. That considered, it is shocking to see the negative impact that a few rogue, deceitful employees can have on an organization. The Association of Certified Fraud Examiners recently released its 2016 Global Fraud Study. Here are a couple of statistics from the study that emphasize the considerable impact of fraud incidents:
- The study covered just over 2400 fraud cases that totaled to more than $6 billion.
- The median loss of each incident was $150,000. That means that half of the incidents cost companies more than $150,000.
- Almost a quarter of the incidents had losses of more than $1 million.The average organization lost five percent of its revenue, due to fraud.
The study also reinforced the obvious: the longer the fraud goes undiscovered, the higher the losses are. With typical companies losing five percent of their revenue to fraud, it appears that companies may just have to live with the fact that there are wrongdoers among us.
However, the study did provide suggestions on how organizations can protect themselves from fraud and lessen the impact of losses. Two significant measures an organization can take are to:
- Establish active fraud control measures, such as audits and monitoring of key indicators that can identify risk.
- Establish an anonymous whistleblower program.
Companies with fraud control measures were able to detect fraud 28 percent more than companies that did not. The bigger impact though was establishing an anonymous whistleblower program. These companies’ ability to detect fraud jumped to more than 47 percent.
With nominally priced, web-based, anonymous incident and whistleblowing tools on the market, it is advisable for companies to incorporate this type of tool into their fraud or incident management programs. Using the numbers shown in this study, stopping one incident sooner than later will likely have a huge, positive impact on the company, and may help the good people in your organization to continue feeling positive about their efforts.
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