Guide to Preventing Workplace Fraud - Chubb Group of Insurance ...

RESPONDING TO THE THREAT OF FRAUD
Responding to the threat of fraud can be challenging. There is no “cookiecutter”
fraud response strategy that is appropriate for every business. The
diversity of fraud risks associated with different business environments and
situations requires that fraud risk responses be appropriate for the specific
business operations, business environment, and fraud experience.
Consider that the “ideal fraud opportunity” might include any of the
following factors:
■
A weakness in the internal control system or the ability to easily
override the control system (i.e., an opportunity).
■
Pressures or incentives to commit fraud sufficient to overcome the
pressures or incentives not to commit fraud.
■
Perceived reward for fraud is relatively high.
■
Perceived risk of detection is relatively low.
■
Potential penalty, if caught, is perceived as being small or
relatively inconsequential.
Therefore, an effective fraud response plan should:
■
Limit fraud opportunities by establishing strong internal controls and
limiting overrides of those controls.
■
Manage pressures and incentives inherent in the business process (to the
extent this is possible).
■
Focus fraud prevention and detection efforts on risks where potential
financial loss is the greatest or where cumulative losses from smaller
frauds may be significant.
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