Beware! 57% of occupational fraud is committed by company employees
With a total loss of more than USD 3,6 billion in 2022, occupational fraud is categorized as the most expensive form of fraud. Moreover, with a total of 2,110 cases, this type of fraud is one of the most common in the world.
The term “occupational fraud” refers to fraud committed by individuals against a company or organization that employs them. This form of fraud includes corruption, embezzlement, misuse of assets, theft of company data, manipulation of report data, and other modus operandis that are detrimental to the company.
Interestingly, according to a study, as much as 57% of occupational fraud is committed by internal company employees or a combination of employees and external parties. The external parties in question are parties outside the company that have links with it, such as vendors, contractors, or supply chain companies.
The impact of occupational fraud on companies
Occupational fraud can cause several losses to a company. First, the company can suffer a material loss. In the United States, employee theft involving cash, assets, sensitive data, and even time is a multi-billion dollar issue.
According to research by the Association of Certified Fraud Examiners (ACFE), companies lose an average of $1.7 million per case of employee fraud.
Second, it can also affect the reputation of the company. Companies that are reported to be victims of fraud by their own employees will lose credibility in the eyes of clients, especially for companies engaged in banking and data services. This is also one of the reasons companies tend to not report cases of fraud carried out by internal parties to the authorities.
Third, employee fraud can have a negative impact on the company’s work environment. The negative effects influence employee performance and have the potential to summon other criminals to carry out the same modus operandi.
Occupational fraud detection
Given the potential impact of occupational fraud on companies, stakeholders must strive to prevent occupational fraud from an early stage.
Detecting fraud as early as possible is essential, because the sooner fraud is detected, the smaller the loss suffered by the company.
The most effective early-detection tool for preventing crime in a company is a whistleblowing system. Results from the ACFE study show that organizations that do not implement a whistleblowing system suffer twice as many losses.
With an effective whistleblowing system, employees can report signs of fraud or other violations that they encounter at the company. The existence of a whistleblowing system also means that an organization abides by the principles of transparency.
Integrity Asia, a company with over two decades of experience in the compliance field, is ready to provide whistleblowing system services for clients from various business backgrounds. Through the Canary Whistleblowing System, we provide a combination of multiple reporting channels centric to our website application. This way, we can increase our clients’ accessibility to reports while still ensuring the confidentiality and anonymity of the reporter.
Contact us for more detailed information about the Canary Whistleblowing System and other compliance services.
Destin
Photo by Israel Andrade on Unsplash
