7 Ways to Strengthen Your Enterprise Risk Posture
Experience and research has enabled Lowers Risk Group to identify many ways companies can reduce or prevent fraud while protecting the organization’s most valued assets:
1. Set the “Tone from the Top”
Managers and owners of small-medium sized businesses should focus their control investments on the most cost-effective mechanisms, such as setting an ethical “tone from the top” for their employees, as well as those most likely to help prevent and detect the specific fraud schemes that pose the greatest risks to their businesses.
2. Review & Analyze Past Losses
By holding scheduled review sessions, financial performance can be interpreted and any past losses examined. Discuss ways to avoid similar losses in the future. Periodically evaluate and reevaluate potential loss scenarios that would adversely affect the organization and its ability to conduct business. Build processes and systems to help eliminate any identifiable causes and address contingency planning scenarios.
3. Create & Maintain a Strong Ethical Culture
In June 2010, the Arlington, VA, based Ethics Resource Center released a national study that found that organizations with strong ethical values – from top executives to middle managers to rank and file workers – experience less misconduct, more frequent reporting of misbehavior, and less retaliation on the job. The study indicates that strong ethical culture in a company has a profound impact on the workplace behaviors that can keep a business out of jeopardy.
4. Empower Employees
Employees must know they can directly create and influence your organization’s risk mitigation strategies and tactics. Let them know that doing so can potentially save the business its earnings and reputation.
5. Build Redundant Checks & Balances
It is imperative to change any key financial steps where only one person has full knowledge and control. Two (or three) person control is essential even for the smallest of organizations.
6. Institute a Loss Prevention Program
After careful and thorough analysis, design, plan, and implement a comprehensive loss prevention program that directly addresses the risks your business faces.
7. Create Touch Points
Identify where your organization connects with employees: new employee orientation, company-wide meetings, technical training, employee letters, bulletin boards, websites, and publications. Then determine how each of these touch points can serve as an opportunity to train and reinforce ethics, fraud prevention, compliance, and other similar messages.
The seven practices outlined here can go a long way toward strengthening your organization’s risk posture and protecting it from losses. Enlist the help of a qualified risk management consultant to assess your risks and design programs to protect your people, brands, and profits.