Anti-fraud processes to protect organizations

Fraud management in organizations, whether public or private, has become a major issue over the last ten years. Corporate governance's growing awareness that this operational risk can be a real source of cost, jeopardizing the preservation of company margins, is gradually leading to an organized response in the form of a structured anti-fraud process. This process presupposes the definition of an anti-fraud strategy. Structuring the process involves avoiding certain pitfalls and clearly defining roles and responsibilities, backed up by sufficient skills and resources. This is a recurring difficulty in many business sectors, where the risk of fraud is sometimes difficult to quantify or even measure.

Certain sectors, such as banking, insurance and mutual insurance, have gradually structured their responses to the risks of fraud, a term that is deliberately plural because fraud is protean and evolving. Fraudsters are adapting, and fraud schemes are either becoming more complex or multiplying. It is also interesting to note that the risk of fraud recurs several times over time, and that certain now well-known fraud schemes continue to operate (e.g. electronic banking fraud, phishing fraud, and fraud involving false international transfer orders known as "governance fraud").

A number of recent high-profile cases illustrate the need to keep up the fight against fraud. Risk Manager barometers put fraud at the top of Risk Managers' concerns list, well ahead of governance risks, or right up there with other risks such as strategic and financial risks. Other studies and reports emphasize that fraud is a major issue, one that is often underestimated, and one that requires constant attention as fraud schemes evolve and fraudsters become more professional.

Consequently, the purpose of this article is to consider how to structure an organizational response to fraud risks. We define fraud as an operational risk (inherent to a given activity) resulting in an attempt at illegal, undue enrichment by a person (physical or moral) external to the organization or internal to it; it is then a question of internal fraud, to the detriment of the organization that is the victim...