Integrity within an organization can manifest in multiple ways, from providing accurate and complete information during client interaction, even in the face of challenges or mistakes, to various business and networking events, where integrity translates to the accurate representation of the company's values and goals, honoring commitments made, and avoiding of any form of manipulation or deceptive promotion. Similarly, integrity reflects in how managers delegate tasks and responsibilities to their team; an upright manager acts equitably, considering the abilities and contributions of each team member, avoiding favoritism or discrimination.
What common myths about fraud and integrity can impact risk management and reputation?
Developing an organizational culture that promotes ethical conduct is the foundation of fraud prevention. Thus, addressing the myths surrounding fraud is crucial to understanding how they can impact an organization's ability to manage risks and protect its most valuable assets: integrity and reputation.
The confidence myth. A prevalent myth revolves around trust and thoughts such as "this won't happen in our company" or, on a more personal level, "this won't happen to me." Such an approach can result from a low level of awareness of existing fraud risks and methods, leading to overconfidence in the company's level of protection against internal or external fraud.
The reaction myth. A misconception, this time related to reaction, is that "if something happens, we'll quickly identify it." Indeed, fraud schemes often span significant periods, generating risk indicators that can allow for their identification; however, sometimes fraud schemes evolve over time or are abandoned in favor of others, that make fraud much harder to spot.
The loss myth. Lastly, a common myth is the idea that "the losses won't be that big." In reality, according to 2022 ACFE report, fraud schemes often span significant periods, with the average case lasting 12 months before detection and causing a loss of approximately USD 8,300 per month. Thus, it is important to consider not only damages incurred, but also other costs associated with fraud schemes, including business interruption, loss of customers, costs associated with consultants and lawyers or costs incurred from implementing post-factum procedures to reduce risks, as well as the impact on reputation.
The impact of training in fraud prevention
Training programs are key in helping organizations prevent fraud by creating a culture of honesty and alertness. According to the Association of Certified Fraud Examiners (ACFE) Report to the Nations 2022, the effect of employee and manager fraud awareness training increases the likelihood of detection by tip. Specifically, the report states that cases detected by tip with training were higher (45%) compared to cases detected by tip without training (37%). Additionally, reports of fraud are more likely to be submitted through hotlines with training, accounting for 58% of tips, compared to 42% without training.
These programs are often delivered online, making it easy for employees to learn from anywhere, at their own pace and time. They include interactive activities that engage employees directly, helping them understand and remember anti-fraud conduct and practices.
Prevention as a strategic investment
As organizations navigate the complexities of the modern business landscape, investing in a culture of integrity and empowering employees to be vigilant against fraud becomes not just a strategy, but a necessity for long-term success and reputation protection. By discrediting common myths surrounding fraud, companies can confront the reality of fraud risks and take proactive steps to mitigate them. Through accessible, interactive, and up-to-date training programs, every employee becomes a frontline defender against fraud, contributing to a robust prevention strategy.
