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7 Strategies for Fraud Prevention in Your Business

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fraud prevention in your business

There are several avenues of growth for organizations, and most industries are seeing exponential growth. However, they are also faced with increased occurrence of business fraud that is being undertaken against them. According to Comparecamp, around 95% of all business has faced theft by their employees. It requires companies to safeguard their finances and sensitive documentation from falling into the hands of unauthorized personnel, and worse still, their competition. It would help if you devised policies and procedures to prevent such incidents from, happening as it may lead to severe loss face and financial loss.

Ways to Protect Your Business Against Fraud

In this article, we will take you through some of the fraud prevention tips to prevent such incidents from taking place.

Use stringent access control mechanisms

One of the significant reasons for fraud is that someone may easily break into your networks and gain access to critical information. You must have stringent access controls to such details – be it online or physical documents. You must have a central repository to store such documents and have proper access controls and an audit log mechanism in place to ensure that only those with requisite user credentials can only have access to such records. The business must also have a proper hierarchy of personnel who will then grant access to their subordinates who are required to have such sensitive information.

Have a renowned external auditor

If you have to do business in the current scenario, it is necessary to have proper processes in place and conduct a regular audit of those processes. Your business must have an independent auditor to have an audit of your financial strategies and the accounts to minimize the risk of any fraudulent incident.

You can also undertake non-scheduled audits of your books of accounts to check if all the processes are in check. It is also critical to check your IT systems to check for any unauthorized breach and plug any gaps in the IT systems. It would help if you also undertook quality checks of your documentation to prevent any leakage.

You must know your employees

The organization must have a keen watch on their employees. Studies have shown that around 30% of failed businesses can attribute their predicament to employee theft. There must be a proper background check of the employees when they join the organization.

It is essential to request for references and then do a cross-check about their prior working relationship. You must also discuss with the employees and understand if there were any issues at work. It is seen that most disgruntled employees are engaged in fraud against the company.

Using an SSL certificate helps

As your audience moves online to gather information about businesses and transact with them, hackers are also on the prowl to get their data. It is crucial to install an SSL certificate from Cheapsslshop that will encrypt the interaction between the browser of the visitor and the webserver. The HTTPS protocol will act as a line of defense that cannot be breached by hackers to reach your web server.

If you have several sub-domains for your primary domain, you can install Wildcard SSL certificate that will allow you to use a single certificate for your domain and all sub-domains. The certificate will also prevent any third-party to use your website for any malicious activity.

Have an efficient reporting system

It is crucial to have an effective reporting system against incidents of fraud in the organization. It can be cases of fraudulent agencies being deployed as vendors to the recording of any unauthorized access into the secure network systems. There must be a formal policy in place, and the employees must know where and whom to report to if they come across any fraudulent activity.

It would be excellent if you can prevent fraud before it happens. It is another reason why you must involve your employees and have a robust fraud reporting system. You may even reward the employees if they report such cases.

Closely monitor the bank accounts

According to research, around 37% of employee theft through misappropriation has been done by accounting and finance employees. It becomes crucial to keep your finances in check. You must ensure that not all the finance team has access to the bank details.

Also, you must have policies in place to ensure that the banking documents are not strewn across the finance department. Only a few responsible people must have access to such records to prevent any misappropriation of funds.

Assess fraud risks periodically

While business fraud may keep you stressed, you can act proactively by having an independent expert assess the risks your business process faces against fraud. This assessment can be carried out periodically across the entire organization.

The experts can determine and inform you about the fraudulent schemes that can occur given the present situation in the company. They can also tell you about how these frauds can occur. They can also inform you about the warning signals that can notify you when the fraudulent activities can occur.

It is essential to know how such vulnerabilities can be plugged to prevent any loss due to fraud against the business.

Conclusion

You may busy with the daily operations of the business, but those wish to commit fraud are not at rest either. Any fraudulent activities against your organization can lead to severe repercussions. To start, you must have robust fraud prevention processes to prevent such incidents. We have listed out some of these processes in this article. You may take steps accordingly and avoid such occurrences proactively.

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