One in four small business owners fall victim to fraud each year. To lessen your chances, consider conducting a fraud risk assessment. This way you can identify who might commit fraud either inside or outside of your company and determine which departments of your company are most vulnerable.
While daily operations and meeting deadlines are most likely top of mind each day, working toward protecting your business should help you rest easier at night. Minimizing your fraud risk doesn’t have to be costly or time-consuming. In fact, you can take steps to safeguard your company’s assets starting today.
Moving Forward with Your Fraud Risk Assessment
An initial fraud risk assessment takes planning and is best implemented in steps; however, once in place, ongoing monitoring is usually all that’s needed. With that in mind, these measures can help you begin your company’s fraud assessment process:
1. Build a Team
Who can help you see your business from all angles? You might want to consider assembling your management team, financial professionals, someone with legal expertise, and additional personnel from operations, sales, and information technology. As the proverb says, “If you want to go quickly, go alone, but if you want to go far, go together.”
2. Identify Potential Fraud Threats
With your team, brainstorm which entities pose the greatest risk to your company’s bottom line. There aren’t any bad ideas here. It could be your employees, vendors, or even your customers. It could come in the form of skimming cash, payroll fraud, false invoicing, or cyber scams. Looking at the whole picture together can be eye-opening. Remember that identifying potential fraud threats from employees or customers doesn’t mean you don’t trust them or that you think fraud is happening. This exercise is about taking proactive steps to protect your business and your employees.
3. Determine Gaps in Security
Once you establish the key processes with the greatest fraud risks, find out what you can do to patch the holes. If it’s a problem with employee reimbursement, concentrate your efforts on expense report training and documentation. Perhaps it’s an oversight in your IT department that can be fixed with updated software. Each business has its unique challenges, and as a small business owner, this is your opportunity to work toward solutions.
4. Set Fraud Risk Priorities
Of course, any fraud can be detrimental to a small business, but a laser-like focus on your most likely offenders can be the best use of resources. Taking a tiered approach may also work for your business; tackle one potential threat at a time starting with the greatest risk and moving down the list.
5. Communicate Your Fraud Risk Findings
What did you discover during your fraud risk assessment? Your fraud risk team and your employees should be made aware of the findings; as a result, they might have additional information to contribute, an idea to share, or become more careful with their financial responsibilities as it relates to your business. It’s also necessary to communicate your fraud prevention plan clearly so employees understand any new processes or expectations.
Protecting your business from fraud can have its own rewards. By opening dialogue within your company, you can work together to illuminate any challenges and build upon a culture that values ideas, problem-solving, and honesty. To get started, our professionals can help assess your company’s fraud risk and set up a plan for success. Contact us with questions.