Using data as a tool against fraud: a pre-emptive approach
By Riaan Moolman FP(SA). Riaan is a Forensic Practitioner since 2011, registered with the ICFP. Since 1991, he participated in and developed various fraud detection and prevention methods.
Occupational fraud committed by rogue employees is considered one of the most common, and potentially costly, forms of fraud. By using data more effectively, organisations can pre-emptively mitigate this risk, says Riaan Moolman, business associate of Incasu.
“Rogue employees are an adversary to any organisation,” Moolman says. “When inadequate controls are in place, as many as 10% of employees could be involved in fraudulent acts that can materially harm the company's profitability and reputation.”
He cites the 2022 research report: “Report to the Nations” by the Association of Certified Fraud Investigators, which states: "Occupational fraud is very likely the costliest and most common form of financial crime in the world. The term occupational fraud refers to frauds that are committed by individuals against the organisations that employ them."
Moolman says: “There are two key reasons why occupational fraud is so prevalent. Any organisation with employees must, to some extent, entrust those employees with access to or control over its assets, whether that means keeping its books, managing its bank accounts or safeguarding its inventory. It is this very trust that can make organisations vulnerable to occupational fraud. Because all fraud, at its heart, is based on breaches of trust. The second reason why occupational fraud is so prevalent lies in the fact that it is so costly to manage, as there are so many people involved that can commit these crimes.”
Mitigating this type of fraud is crucial in overall business risk management, he notes.
“Risk management should be a central part of the strategic management of any organisation. The best way to address this type of risk is to be pre-emptive. However, organisations may not understand what they do not already measure and evaluate, as they do not have the tools to read, manage and use their own information against fraudulent activities from within,” Moolman says.
“Our experience has shown that investments made to acquire sufficient and effective data from business activities always pays off with the improved ability to pre-emptively identify risk events and to take mitigating action. Using the abundance of data generated from within an organisation, and structuring it using business intelligence tools, makes a compelling argument for it to be a significant investment against fraud and the risks associated with it.”
He notes that interactive dashboards provide a means for analytical evaluations of day-to-day data. “The ability to pick up data anomalies as it happens is the best method for an organisation to be pre-emptive in fraud detection and prevention,” he says.
Incasu Insight automatically gives organisations access to all their data on a single platform, with multiple viewpoints and business focuses, and issues notifications about important occurrences in the data. As a cloud-based SaaS product available 24/7, Insight makes risk management and reporting easy.