In today’s rapidly evolving fraud landscape, complacency is a costly gamble. Those well-worn phrases—“That will never happen to me” or “We’ve always done it this way”—might feel comforting, but they’re the kind of cultural blind spots that fraudsters love. These mindsets can quietly creep into even the most robust organizations, leaving them ripe for exploitation.

The New Face of Fraud: Sophisticated, Professional, and Persistent

Gone are the days of laughable scam emails from “Nigerian princes” or poorly written pleas for bail money. Today’s fraudsters are highly organized and laser-focused. They operate in large, professional crime rings, leveraging cutting-edge technology and psychological manipulation to exploit vulnerabilities. Think ransomware attacks that cripple critical infrastructure, data breaches that compromise millions, or phishing schemes that seem almost too convincing to question.

If you think fraud is someone else’s problem, consider this: every Social Security number in the U.S. has likely been bought and sold multiple times in the past five years. Business email compromise (BEC) is now the fraud frontier, with tactics so convincing they’ve fooled even the most tech-savvy individuals. And if you think only the elderly are vulnerable, you might be surprised—BEC schemes target businesses of all sizes, using tactics like fake surveys, phishing emails, and cleverly disguised links to steal sensitive data.

Real Consequences for Real Businesses

Fraud isn’t just a nuisance; it’s a financial black hole. According to the Association of Certified Fraud Examiners (ACFE), businesses lose an average of 5% of their revenue to fraud annually. That’s a staggering figure, especially when you consider that many of these losses could be mitigated with proper education and vigilance.

Take, for instance, the all-too-common phishing email promising a $25 Starbucks gift card in exchange for a quick survey. At first glance, it seems harmless. But by the time an employee has clicked the link and entered personal details, a fraudster may have collected enough information to launch a full-scale attack. Repeated password entry attempts, prompts to reset passwords, and fake account setups are just a few of the tricks bad actors use to gain access to your systems.

The Key to Prevention: Culture, Training, and Vigilance

Fraud prevention isn’t just about having the right tools—it’s about fostering a culture that takes these threats seriously. While technology solutions like spam filters, email quarantine systems, and cyber risk assessments are essential, they’re only part of the equation. The real game-changer? Education and awareness.

Consider launching regular phishing simulations to test your team’s response to potential threats. Annual fraud prevention training should be a cornerstone of your risk management strategy. Teach employees to recognize red flags: unfamiliar senders, urgent requests, odd signatures, embedded links, and unsolicited PDF attachments.

And most importantly, empower your workforce to think critically. Fraud prevention starts at the top, but it’s a team effort. When every employee understands their role in safeguarding the business, they become your first line of defense against fraud.

Don’t Wait for a Wake-Up Call

The time to act is now. Fraudsters aren’t waiting, and neither should you. Adopt a proactive approach to fraud prevention, and let go of those outdated “it won’t happen to us” mindsets. By prioritizing education, strengthening your defenses, and cultivating a culture of vigilance, you can protect your business’s bottom line—and its reputation.

Fraud Week is the perfect time to take a hard look at your organization’s readiness. Are you prepared to outsmart today’s fraudsters? Contact us today to learn how our tailored fraud prevention strategies can safeguard your business.

Given the high prevalence of organizational fraud, as reported by the Association of Certified Fraud Examiners (ACFE), companies have strong incentives to invest in fraud auditing capabilities—both internal and independent (external) audits. While both are extremely effective, this article is focused on internal audits.

It turns out, companies with properly-structured internal audit systems are less likely to experience severe losses due to internal fraud. Further, we find the existence of a strong internal audit capability is of significant interest to underwriters when reviewing applications for crime and fidelity insurance coverage.

All companies can benefit from an internal audit system. When properly structured it provides a layer of protection and sends a strong message to both company vendors and employees that fraud will be detected quickly and won’t be tolerated. Continued monitoring leads to ever changing processes and controls that provide corrective measures designed to deter and detect fraudulent activity.

However, the likelihood of a company having an internal audit unit varies with the size of the company. Small companies are more often found without the internal audit departments, largely based on cost. These firms utilize the services of an independent audit firm to minimize exposure to fraud. This will be the topic of our next article.

7 Best Practices for Internal Audit

The internal audit, like any audit, requires sufficient autonomy, resources, skills, and access to relevant records to produce reliable results. It should operate according to a plan created and/or approved by the Board of Directors, with transparency in its functions that communicates its purpose to all vendors and employees. Communicating a strong message of zero tolerance on fraud and abuse is essential. The internal audit committee has an obligation to report the self-identified audit issue to the Audit Committee or the Board of Directors itself, if possible. … Continue reading

Organizational fraud is a hidden crime. But when it is detected, it is often by a colleague or employee of the perpetrator who happens to discover the fraud – over 40% of the initial detection of a fraud is through a tip, most often from an employee. That’s why the ACFE Fraud Prevention Checkup highlights the necessity of a fraud reporting mechanism, in other words, a whistle-blower program.

An effective whistle-blower program has to both encourage the person who discovers the crime to report it and give him the means to do so. A potential whistle-blower may be someone who works closely with the perpetrator, with bonds of friendship or fears of retribution. The program needs to overcome these barriers to be effective.

In fact, research by the law firm Labaton Sucharow reported in Security Magazine in an article by Jim Ratley found that 34% of employees have learned about “workplace misconduct” and that most of them would report it if they could. The factors that could encourage them to report the issues included remaining anonymous, avoiding retaliation, and getting a reward. … Continue reading

Most managers, and in fact employees at all levels, assume their co-workers are honest and working to do their best for the organization. Unless they are the one who is perpetrating a fraud.

Unfortunately, occupational fraud is a lot more common than most people think. The Association of Certified Fraud Examiners (ACFE) has published a series of reports based on fraud examiners’ actual cases that document the pervasiveness of these hidden crimes. The 2014 edition of the Report to the Nations on Occupational Fraud and Abuse confirms that fraudsters steal 5% of top line revenue every year, which amounts to over $650 billion per year in the U.S. alone, and an astonishing $3.7 trillion worldwide. … Continue reading

This week is International Fraud Awareness Week, a global effort led by the Association of Certified Fraud Examiners (ACFE) to minimize the impact of fraud by promoting anti-fraud awareness and education.

We are proud to be among almost 1,000 organizations supporting this effort through the publication and distribution of educational materials that can help managers identify fraud risks and develop mitigation programs. This week we will feature fraud prevention-related content on our blog and we have issued a special edition of The Risk Mitigator. We are also proud to announce the release of our visual guide, 10 Fraud Facts. The guide highlights 10 facts about fraud from the ACFE’s 2014 report and offer tips to help your organization develop an effective fraud prevention program. Get your copy here.

Awareness of the potential for organizational fraud is the first step toward prevention. Yet a surprising number of organizations have no systematic fraud detection and prevention policies in place, leaving them more vulnerable to this hidden crime than they need to be. … Continue reading