Fraud and embezzlement: The most common types of fraud
It isn't just financial institutions that are vulnerable. All types of business are. There are more than many companies think, and their fraudulent activity causes huge financial losses year after year.
They’re friendly, fit in well and completely integrated with your team. Many of the qualities you’ll look for in a good, high-achieving worker also make a successful fraudster. This includes determination to succeed, an appetite for risk, ambition and a focus on getting to the top.
That’s why it’s so important for companies to balance trust and corporate culture with prevention and control.
Satisfied employees are normally far more loyal than those who find themselves in a toxic working atmosphere. They should feel comfortable, respected and appreciated by their managers and colleagues. And also happy with their roles, pay, prospects and personal development.
Harassment, frustration and revenge are often the motives that prompt insiders to commit crimes.
That means a welcoming, tolerant corporate culture and transparent communication are vital in keeping your employees on your side. When colleagues trust each other and feel comfortable raising problems, it's easier to identify weak points and close loopholes. This allows you to identify criminals much faster.
However, it’s not all about being friendly. Control mechanisms, guidelines and routine checks are just as important for your company’s protection. This is because it’s often a case of the opportunity creating the thief.
Despite all those checks, bad apples will always find ways and means to commit fraud.
Most inside criminals have a criminal mindset and a degree of creativity. This helps them seize opportunities as soon as they present themselves. They’re even able to get around even the best control processes.
That’s why you can't become complacent about your existing processes or lulled into a false sense of security. You should always take extra steps to protect yourself. Find expert advice to help protect yourself, and make sure you have comprehensive business fraud protection.
Building a trusting culture in your business can help with fraud prevention
The importance of trust and culture in preventing fraud: What do you need?
- An open, trust-based corporate culture with clear, simple hierarchies.
- A good, constructive culture of criticism of errors and open communication.
- Clear corporate guidelines and ethical values that you integrate into day-to-day work.
- A cooperative, democratic leadership style that shows appreciation, trust and respect.
- Good working conditions: fair pay, financial incentives, rewards for performance, and interesting challenges.
- Equal opportunities, diversity, and fair career prospects with clearly defined objectives and transparent criteria.
- Talent management and staff satisfaction surveys; implementation of measures to increase staff satisfaction levels.
- Support for employees in (personal or financial) difficulties through appropriate assistance or counselling programmes.
What steps can you take to protect your business from fraud?
Precautions and controls to help prevent fraud
- Put control and compliance systems in place; in particular the separation of functions (four or more eyes principle).
- Create campaigns and provide training to raise awareness among staff of internal guidelines, critical situations and how to detect anomalies.
- Carry out routine checks, internal audits, and checks by external third parties where needed.
- Implement secure internal (and where appropriate, external) whistleblowing channels (e.g. ombudspersons) and regular information to staff.
- Implement preventive risk management and regular process updates, reviews and improvements for system weaknesses.
- Be vigilant and observant to spot irregular activities. This includes peculiar working hours, attempts to access secure data or personal information, or the use of protected data storage media.
- Check on job applicants, e.g. compliance screenings, police clearance certificates, background checks, and references.
- Examine personal factors and backgrounds for especially security-sensitive positions.
Protect yourself from fraud
Even the most stringent security controls and supportive corporate culture won’t eliminate the risk of internal business fraud. Protect yourself against financial losses through dishonest, fraudulent, malicious or deliberate criminal acts with our comprehensive fraud protection cover.
We’re here to answer all your questions, whether you’re an Allianz Trade customer or not.