Fraud is continuing to impact organizations. Both internal and external fraud schemes are becoming more costly, hurting companies’ bottom lines and reputations. The cost of fraud investigations is also increasing.
Most global organizations surveyed for the latest Kroll Global Fraud and Risk report (82%) said their companies had been significantly impacted by various forms of fraud, including money laundering, corruption and other serious illicit activity or misconduct.
Details of fraud investigations
And 78% of those organizations have conducted investigations into fraudulent behavior in the past three years. Almost every company that pursued an internal fraud investigation brought in an external firm to help uncover fraudulent activity.
The most common external firms these companies worked with were:
- Computer forensics/eDiscovery firms (55%)
- Investigations firms (47%)
- Accountancy firms (45%), and
- Law firms (42%).
Bringing in these experts has proved costly for firms. Almost 80% of companies surveyed said that the cost of fraud investigations has increased over the past three years – and 26% of them noted a significant cost increase.
Even though the help of outside firms has been beneficial for many companies, they’re not necessarily feeling that they’re getting enough value for their money.
In fact, 29% of those surveyed said that document review/eDiscovery services were the most expensive compared to the value they received in return. And 24% believed computer forensics services were overpriced.
Best value for the money
So, what’s the best way to get the most of out of what you spend toward fraud prevention? Kroll says taking a proactive approach to stopping fraudulent behavior is your best bet.
Planning ahead helps you get more bang for your buck. Instead of investing in computer forensics or document analysis after fraud is suspected, investing in data analytics can help you spot suspicious activity before it becomes widespread and expensive for your firm to correct – and before it damages your reputation.
It might be intimidating to get started with this process if you haven’t yet. However, the best first step is to conduct a risk assessment of the areas of your firm that are most vulnerable to fraud. Ask yourself: What risks need to be measured? You’ll likely find quite a few in Finance.
Then, you should identify the data you’ll need to gather to measure these risks and the tools you’ll need to compile and analyze this data. You may need to work with IT to figure out what system will work best for your needs.