Fraud Risk Management

How can a company eliminate fraud risk completely? Is there a way to prevent all opportunities for fraud? Unfortunately, the answer is ‘no’, but the companies can mitigate the fraud risk by using a methodological approach. The approach should have the below aspects:

• The companies should have high ethical behavioral standards for all the levels of hierarchy starting with the Board and spreading down to the whole organization and its business partners.
• They should implement a structure where control environment is set for managing the fraud risks.
• The companies should perform risk assessments not only for the risks that they might face during their daily operations, but also for the fraud risks that they might face because of either their inherent structure or other business partners.
• The companies should establish certain control activities to prevent the fraud instances before they occur.
• The awareness related to fraud should spread to all the members and related parties of the company, regardless of their effect in the decision-making process.
• Senior management should oversee the fraud management activities and feel the ownership of responsibility related to fraud risks.