A Blueprint to Managing Corporate Fraud Risk During a Pandemic
July 13, 2020
The COVID-19 pandemic has caused unprecedented damage worldwide, not only as a global health crisis but also in the way of global economic downturn. In this time of crisis, with record-breaking unemployment, employee furloughs, and companies cutting expenses in order to stay afloat, there is an increased vulnerability and heightened risk for corporate fraud.
In his whitepaper titled “A Blueprint to Managing Corporate Fraud Risk During a Pandemic,“ written for the Internal Audit Foundation, Nelson Luis, shares a plan for those in management positions to successfully identify and navigate corporate fraud within their organizations.
Experience tells us that when certain people feel they have no other choice, they may decide to commit fraud for the first time. Others, perhaps more familiar with fraudulent acts, may see this as the perfect time to take advantage of the situation. No matter the scenario, is seems that “the unfortunate reality is that the COVID-19 pandemic is creating an environment ripe for fraudulent activity,” says Nelson.
It is important for organizations to act quickly and adapt their risk management and control frameworks to ensure that proper fraud detection procedures are in place. The earlier action is taken, the higher the likelihood that an organization can both mitigate the fraud and alleviate costly fraud investigations in the future.
“Fraud is an unfortunate fact of life and is impacted by internal and external factors. As organizations adapt to the economic downturn and new working conditions due to the COVID-19 pandemic, they need to adapt and work creatively to protect against fraud that is related to financial losses, enforcement penalties, and loss of reputation,” explains Nelson.
Nelson’s blueprint for organizations looking to manage corporate fraud includes:
- Assessing where they are most vulnerable to fraud
- Instituting fraud mitigation procedures to protect the organization
- Actively monitoring for fraud red flags
To learn more, download the full whitepaper below.