Fraud Risk Management

Transcription

1 1 Fraud Risk Management Building and Sustaining An Anti-Fraud Business Environment January 19,

2 2 Risk Management A continuous process to identify, analyze and manage risks 4 Strategies 1. Avoid / Prevent 2. Minimize / Reduce 3. Transfer 4. Consciously Accept

3 3 Fraud Risk Management A continuous process to identify, analyze and manage fraud risks 4 Strategies 1. Avoid / Prevent Fraud 2. Minimize / Reduce Fraud 3. Transfer Fraud Risks 4. Consciously Accept Fraud

4 4 Polling Question #1: What is your greatest fraud concern today? 1. Theft 2. Manipulated financial results 3. Manipulation of other results 4. Corruption and shadow deals

5 5 What Holds Us Back 1. Uncertainty about how to start 2. Uncertainty about what is involved 3. Lost momentum 4. Inadequate leadership support 5. Flawed beliefs 6. Flawed perception about the cost / benefit of anti-fraud initiatives

6 6 YOU CAN IMPROVE YOUR CHANCES Deterrence, Prevention Prompt Detection, and Efficient Handling

7 7 Purpose: Provide the Missing Structure

8 8 Polling Question #2: What best describes your current level of employee anti-fraud readiness? 1. Taking daily proactive steps to prevent wrongdoing 2. Willing, but don t know how to follow through 3. Feel it s not their responsibility 4. Really don t care about it

9 9 Five Essential Actions * 1. Visible and Vocal Leadership 2. Meaningful Fraud Risk Assessment 3. Anti-Fraud Controls and Behaviors 4. Anti-Fraud How To Skills Training 5. Fraud Response in Place

10 10 Anti-Fraud Campaign Component 1. Visible and Vocal Leadership

11 11 #1 Question at Live Seminars How do we get management to acknowledge the real risks of fraud in their areas? Nothing happens without Strong Consistent Executive Leadership

12 12 Visible and Vocal Leadership 1. The CEO must lead the charge 2. Invest in being actively involved in employee awareness and training 3. Talk about it explicitly 4. Positive Work Environment 5. Define Acceptable Behavior 6. Clarify Fraud Expectations 7. Policy on Fraud Responsibilities

13 13 Explicit Expectations

14 14 POLICY ON FRAUD RESPONSIBILITIES Example Policy on Fraud Responsibilities Introduction Like all organizations, ours is faced with risks from wrongdoing, misconduct, dishonesty and fraud. As with all business exposures, we must be prepared to manage these risks and their potential impact in a professional manner. The impact of misconduct and dishonesty may include: the actual financial loss incurred damage to the reputation of our organization and our employees negative publicity the cost of investigation loss of employees loss of customers damaged relationships with our contractors and suppliers litigation damaged employee morale Our goal is to establish and maintain a business environment of fairness, ethics and honesty for our employees, our customers, our suppliers and anyone else with whom we have a relationship. To maintain such an environment requires the active assistance of every employee and manager every day. Our organization is committed to the deterrence, detection and correction of misconduct and dishonesty. The discovery, reporting and documentation of such acts provides a sound foundation for the protection of innocent parties, the taking of disciplinary action against offenders up to and including dismissal where appropriate, the referral to law enforcement agencies when warranted by the facts, and the recovery of assets. Purpose The purpose of this document is to communicate company policy regarding the deterrence and investigation of suspected misconduct and dishonesty by employees and others, and to provide specific instructions regarding appropriate action in case of suspected violations. Policy on Fraud Responsibilities Page 1 John@JohnHallSpeaker.com

15 15 Anti-Fraud Campaign Component 2. Meaningful Fraud Risk Assessment

16 16 Fraud Risk Assessment: Answers the Question What Could Go Wrong

17 17 Fraud Risk Assessment: Key Elements 1. How might a fraud perpetrator exploit weaknesses in the system of controls? 2. How could a perpetrator override or circumvent controls? 3. What could a perpetrator do to conceal the fraud?

18 18 CHALLENGE Brainstorming Fraud Risks: Think Like A Thief

19 19 Fraud Risk Assessment 1. List risks 2. Assess probability and impact 3. Measure and track losses 4. Address identified weaknesses

20 20 Polling Question #3: Have you personally participated in a formal Fraud Risk Assessment? 1. Yes 2. Sort of but the effort wasn t what I would call formal 3. No

21 21 Managing the Business Risk of Fraud: A Practical Guide

22 22 Anti-Fraud Campaign Component 3. Anti-Fraud Controls and Behaviors

23 23 Anti-Fraud Controls 1. Fraud exposures are identified. 2. Specific procedures and behaviors are developed, implemented and maintained to both prevent these events from happening and to detect them should they occur. 3. Controls include emphasis on both hard control procedures and soft control behaviors.

24 24 Effective Internal Controls Infrastructure Behaviors

25 25 HI HUMAN BEHAVIOR (SOFT CONTROLS) III IV I II LOW INFRASTRUCTURE (HARD CONTROLS) HI

26 26 Controls Infrastructure 1. Leadership words and deeds 2. Culture of quality 3. Policies, procedures and systems 4. Transaction initiation, review, approval 5. Effective screening (and re-screening) 6. Finance and accounting knowledge 7. Exposure assessment 8. Limited access

27 27 Controls Behavior 1. Competence, integrity, interest 2. Daily prevention-based behaviors 3. Pause at the moment of approval 4. HDIK? is the norm 5. Culture of Doubting 6. Daily detection-based behaviors 7. Real oversight and analysis 8. Coaching of desired behavior

28 28 Polling Question #4: We currently have: 1. Solid Anti-Fraud Control Procedures 2. Managers and staff trained in Anti- Fraud Procedures and willing to take action! 3. Both 1 and 2 We re ready to roll! 4. Neither 1 nor 2 We re just getting started and may need help!

29 29 HI HUMAN BEHAVIOR (SOFT CONTROLS) III IV I II LOW INFRASTRUCTURE (HARD CONTROLS) HI

30 30 Four Daily Behaviors 1. Look for fraud indicators 2. Use How do I know? 3. When in doubt, doubt 4. Resolve or refer suspicions

31 31 The Anti-Fraud Moment

32 32 Polling Question #5: If you could only select one, which option below would have the biggest impact on your organization s anti-fraud efforts? 1. Issue a Policy on Fraud Responsibilities 2. Conduct a Comprehensive Fraud Exposure Analysis 3. How-To Anti-Fraud Skills Training for managers and staff 4. Prosecute wrongdoers

33 33 Anti-Fraud Campaign Component 4. Anti-Fraud How-To Skills Training

34 34 Question from Live Seminars Lack of specific anti-fraud skills is a major weakness in our organization. How can we efficiently and effectively teach everyone what they need to know?

35 35 Polling Question #5 PAST RESULTS 1. Issue a Policy on Fraud Responsibilities 2. Conduct a Comprehensive Fraud Exposure Analysis 3. Anti-Fraud Skills Training for managers and staff 4. Prosecute wrongdoers 14% 62% 10%

36 36 Anti-Fraud Skills What fraud skills are needed: General knowledge of fraud risks What can happen in their areas What it will look like when it happens Hard control purpose and execution Why soft controls are so important Suggestions on prevention Suggestions on prompt detection when prevention fails

37 Anti-Fraud Skills Training 1. Group live 2. Technology-based Teleseminars Webinars Video 3. Written 4. 1 on 1 coaching 37

38 38 Anti-Fraud Campaign Component 5. Fraud Response In Place

39 39 Fraud Response Challenges 1. Uncertainty and fear 2. Response readiness 3. Loss recovery 4. Reporting to the authorities 5. Learning from fraud events 6. Morale and HR 7. Publicity

40 40 Effective Fraud Handling 1. Response mechanism 2. Investigation 3. Loss recovery 4. Control weaknesses 5. External authorities 6. Publicity 7. Morale and HR concerns

41 41 Five Actions Status? 1. Visible and Vocal Leadership 2. Meaningful Fraud Risk Assessment 3. Anti-Fraud Controls and Behaviors 4. Anti-Fraud How To Skills Training 5. Fraud Response in Place

42 42 This program gives you a System Framework Blueprint Plan of Attack!

43 43 But You Have To: 1. Tailor the Plan to your unique organization 2. Work your tailored Plan 3. Share your Plan with others 4. Recruit them to your team

44 44 Help Option #1 John J. Hall (970)

45 45 Help Option #2 The Anti-Fraud Toolkit

46 46 The Anti-Fraud Toolkit 1. Over 5 hours of self-paced video instruction 2. All PowerPoint Slides 3. Anti-Fraud Policies 4. CEO Talking Points 5. Employee Campaign Wording 6. Action Tools and Checklists 7. Examples of Proven Practices 8. Consulting Tools 9. Turn-by-Turn Instructions

47 The Anti Fraud Toolkit Retail Price: $ Toolkits available through this Webinar for $ (plus $13.00 shipping by US Mail Priority Mail) 1. TEXT Fraud to Complete the Opt-In Acknowledgement 3. Enter promo code fraud (all lower case) 100% 60-Day No-Risk Guarantee from time of shipment 47

48 48 Questions, Comments, Feedback John J. Hall (970)

49 49 Thank You