When it Comes to Fraud, Why Risk it? A Guide to Fraud Risk Factors

Fraud and Financial Crime

Sam Sweet

Jun 17, 2019

Although being a target of financial fraud is almost inevitable for many organizations, being a victim of fraud is not. While the headlines concerning fraudulent activity tend to focus on large-scale corporate fraud, companies of all sizes -- specifically small to medium sized enterprises (SME) -- are consistently under attack by fraudsters and often the least prepared. In order to begin assessing the threat of fraud and establishing an effective and up-to-date fraud-prevention strategy, you must first know the fraud risk factors for SMEs.

Three alarming facts about fraud:
• 74% of fraud exploits weak internal controls
• 51% of fraud is committed by staff with more than 6 years tenure
• 84% of mid- to senior level finance staff know how to avoid security system/processes and commit fraud

With the risk of fraud looming over your organization what do you need to do to ensure that you’re protected?

As a forward-looking SME, it is time to take action and enhance your protection in the on-going fight against fraud by understanding the three types of fraud typical to SMEs in particular:

• CEO Fraud— fraudsters posing as senior figures within organizations in order to gain access to financial information and accounts
• Payment Diversion— the manipulation of account details for a customer, or more commonly, a supplier
• Payroll Fraud— the altering of the payroll system in order to divert funds to an unauthorized recipient’s account

When it comes to fraud, why risk it? To minimize the fraud risk factors in your organization, you need a payment fraud prevention infrastructure that coordinates your people, processes, and technology to proactively recognize and detect vulnerabilities. As a growing business, a system based largely on trust is simply insufficient and outdated in the modern world of financial fraud— reducing the risk of payment fraud can be as easy as introducing simple strategies such as self-evaluations and consistent audits.

To find out how to tailor a financial fraud prevention strategy based on the needs of your growing organization, download the Fraud Sector Guide: Small and Medium Sized Enterprises.

For even more insights into the payments industry and beyond, subscribe now and stay up-to-date on the latest trends and topics.

Related topics

Fraud Fraud Risk Security

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Sam Sweet

Sam Sweet is a featured SmartPayments contributor who brings a global perspective to his writing. He is currently studying communications at Denison University and interning at a fast-paced, multi-faceted marketing department at a leading fintech organization specializing in global payments, banking solutions and fraud prevention platforms.
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