Top 10 Risk Management Articles from 2014

By Lowers & Associates,

risk management articles

We’re pleased to kick off the new year by sharing our most-read blog posts from the Risk Management Blog in 2014.

1. Protecting Against Ghost Employee Fraud

Payroll fraud accounts for about 9.3% of occupational fraud at a cost of over $300 million per year across all types of organizations. One of the most common forms of payroll fraud is the use of “ghost employees” to divert money to fraudulent identities. Like all organizational frauds, this is a hidden crime that can best be prevented by controls designed to expose all payroll transactions.

Read full post >

2. Key Components of a Fraud Risk Prevention Policy

In this post, we offer an overview of the elements of a fraud prevention program that would be useful in any organization. Summarized from, Managing the Business Risk of Fraud: A Practical Guide, produced by a consortium of associations, the guidelines point to specific steps managers can take to implement an effective fraud prevention program.

Read full post > … Continue reading

Data Analytics as a “Survival Strategy” for Fraud Control

By Mark Lowers,

Big Data is becoming a resource in the fraud fighter’s arsenal as more companies are using data analytic software to look for anomalous patterns in internal data. This method has helped some companies monitor more data sources, cutting the time for detection and reducing the costs of fraud.

A recent post by Peter Goldmann of ACFE reports on the rate of adoption of data analytic technology, finding that the largest group is companies that have no data analysis program at all (almost 30%–see the bar graph). … Continue reading

  Category: Fraud Prevention
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Why Fraud Prevention Really Matters

By Mark Lowers,

Despite the wealth of well-publicized information about the high prevalence of organizational fraud and the high costs of fraud, it is always surprising to learn that so many companies operate without systematic fraud prevention programs, or fail to review their programs on a regular basis.

In fact, there are very important reasons fraud prevention is worth the effort. Here are some of them: … Continue reading

The Case for a Risk-Based Approach to Compliance Auditing

By Lowers & Associates,

In general, compliance is conforming to particular expectations, standards, or behaviors, where risk is an exposure to potential loss or injury. When we think of compliance in the security arena, it often means that you are following prescribed standards, which could be regulatory, industry best practices, or standards that are otherwise customized or company specific.

While compliance and risk often follow the same path, a compliance audit or survey is often performed with a one-size-fits-all “compliance only” approach, as opposed to one that requires more complex reasoning.

Some may question the rationale of compliance if risk is not a constant consideration. Lack of experience, industry knowledge, or even simply lack of time can hinder the ability to take a more risk-based direction. After all, taking a compliance only approach simplifies the security audit process by allowing for uniform application, reduced subjectivity and error in assessment, and strong performance metrics capability.

Is the added complexity of a risk-based approach worth the effort? … Continue reading

Lessons in Occupational Fraud and Fraud Prevention

By Mark Lowers,

Occupational fraud is a huge drain on organizations’ resources, costing an estimated global loss of $3.7 trillion dollars annually. And according to the Association of Certified Fraud Examiner’s (ACFE) 2014 study, just 14% of defrauded organizations are able to fully recover their losses.

Fraud is a very real threat to the bottom line of almost every organization in our economy. But it can be prevented, or at least mitigated.

There are 3 steps in setting up a fraud prevention program in your organization:

  1. Understand what fraud is and how it is likely to emerge.
  2. Identify potential sources of fraud in your organizations.
  3. Take steps to prevent fraud through processes or controls.

Ultimately, a healthy anti-fraud corporate culture that permeates from the top down will make your organization more crime resistant. This will take time to nurture, and it will take continuous effort to sustain, but in the end you can make occupational fraud an extinct disease in your workplace.

… Continue reading