COVID-19 and Fraud Risk has been added to Bookmarks.
COVID-19 and Fraud Risk
Preparing and protecting against the heightened risk, now and in the future
Fraud is an ever-present danger to all businesses. The risk has now been driven signficantly higher by crisis and economic downturn. Businesses must ensure that their lines of defence remain sufficient and effective to avoid further damaging loss.
We know that times of crisis, economic hardship, and significant organisational change create the ‘perfect storm’ that can test ethical practices. History demonstrates that during economic downturns, those organisations that invest in enterprise wide resilience, especially in prevention and detection of misconduct, will minimise the impact of the crisis on their corporate wellbeing .
As governments implement COVID-19 stimulus programs and other measures to support economic survival, organisations are understandably more focused on the safety and wellbeing of their people.
Unfortunately however, fraud doesn’t hibernate during a crisis. We often see an increase of reported incidents as well as the discovery of matters post-crisis, undetected at the time, that indicate significant loss has occurred.
We're working with organisations who are already seeing:
- Wide-scale disruption to working practices, causing a material and sudden change to business as usual processes and controls. This creates opportunities for individuals to exploit.
- An increase (or perceived future increase) in financial pressure on individuals, their families and communities, providing motivation for some to compromise their personal integrity.
- Individuals’ ability to rationalise, where poor decision-making is heightened (“I will pay the money back when the economy improves”, “I need to do this to save jobs”, “this is a crisis”).
We're also seeing a surge in integrity related incidents along with increased disclosures made to clients’ whistle-blower services.
- To support economic survival and minimise loss, organisations should be considering now how to emerge from this crisis without adverse issues such as internal and external fraud hindering their ability to recover quickly.