Organizations need to be wary not only of external threats, such as invoice fraud and social engineering, but also mindful that threats can come from within. An employee’s intentional misuse, theft or misappropriation of a company’s assets can be considered fraud. Organizations that lack fraud prevention controls often suffer double the losses compared with their counterparts with controls in place.1 Having proper controls can help detect, deter and prevent internal fraud.
To help reduce the risk of internal fraud, consider the best practices below:
A formal framework can help you identify controls, gaps and address risks, and should:
The implementation of controls is a critical step in developing the foundation of a strong fraud prevention posture. Not only can controls help safeguard your assets, they can also help deter and detect internal fraud. Consider implementing the following controls:
Individuals suffering from a personal hardship or engaging in risky financial activities may have an increased propensity to commit internal fraud. Consider conducting background checks on new and existing employees. To help identify potential risks, look for behavioral red flags among staff such as:
Employees who suspect or witness fraud often keep their suspicions or knowledge to themselves in fear of retribution. Assure confidentiality will be kept when individuals report incidents.
If you believe your organization has been a victim of internal fraud, speak with your J.P. Morgan representative immediately.
1Association of Certified Fraud Examiners, 2016. http://www.acfe.com/rttn2016/docs/Staggering-Cost-of-Fraud-infographic.pdf
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The information within this webpage is provided for educational and informational purposes only and is not intended, nor should it be relied upon, to address every aspect of the subject discussed herein. The information provided is intended to help clients protect themselves from cyber fraud. It does not provide a comprehensive listing of all types of cyber fraud activities and it does not identify all types of cybersecurity best practices. You, your company or organization is responsible for determining how to best protect itself against cyber fraud activities and for selecting the cybersecurity best practices that are most appropriate to your needs.
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