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Three methods of detecting insider fraud

All too often fraud is not detected until it is too late, in some cases several years after the fraudulent act has been committed. In many instances the fraudulent act remains completely undetected. Currently fraud issues abound as the banking system undergoes an overhaul to bring it back to some semblance of health. Perhaps one of the most worrisome signs is the rise of insider fraud, or occupational fraud, which is plaguing SMEs across the UK.

One of the problems faced by SMEs is the decentralisation of power required to run a successful start-up. The more people a business employs, the lesser the control the business owner has over sensitive information such as company accounts. In many cases, the first incline an individual has of a fraudulent act is when they access a free company checking website (like Rmonline.com) which provide detailed company information, including credit reports. In some circumstances, a business which should have an immaculate credit profile is refused a loan. This prompts the business owner to check the company’s credit profile, only to then identify that fraudulent activity from within the organisation has damaged the company’s credit rating. Unfortunately, by this stage the damage has already been done.

The more we automate, the more difficult it becomes to identify fraudulent activity, but there are certain behaviours and situations we can look out for which suggest an employee may be tempted to use company resources inappropriately. Finger prints

Personality changes

In tough economic times, when salaries are being frozen and employees are being overlooked for promotion, workers can often become resentful towards their employer. In many cases, people are asked to do more work for the same money. Any of the above is enough justification for some employees to take their anger out on the employer, and in many cases take what they rightfully believe to be theirs. A change in the personality of an individual is a sign that they may be considering defrauding their employer. If a normally cheerfully and positive person is sullen and subdued, this could be cause for concern.

Lifestyle changes

If a not a particularly well paid employee arrives at work in an expensive new car, has a sudden glut of new clothes and jewellery and is regularly going away on holidays abroad, this could be a sign that something isn’t quite right. Of course they may have a wealthy other-half, or have been left an inheritance, so tread carefully, but it might be something worth investigating.

Conversely, it may become clear that an employee is experiencing financial problems, and in this case the temptation to defraud the company, particularly if they have access to sensitive information, might be difficult to resist.

Suspicious behaviour

There are a number of clandestine behaviours which should certainly arouse suspicion if you know what to look for. An employee who frequently asks where the boss is, is commonly seen in areas they have no reason to be, or is overly possessive about a task they are working on should be viewed with some suspicion.

If you have been the victim of insider fraud then we’d love to hear from you. How did you lift the veil on the fraudulent acts? What has been the impact on your company? Please leave your thoughts in the comments section below.

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