Managing fraud bribery and corruption risks in the hospitality industry

Why the industry is vulnerable to fraud – a hit
and miss comparative
As the industry prioritizes customer service vis-à-vis internal controls, the vulnerability to fraud is very high.
Commonly observed practices
(industry practices)
Resulting potential vulnerabilities
(areas of concern)
• Guest-facing employees focus on guest interaction
• Lack of prioritization of control procedures meant to
prevent or detect fraud (e.g. updating the guest register,
safe use of access cards, etc.)
• Procurement of licenses and clearances on urgent basis
• Engagement with dubious third parties to enable
camouflage of bribes
• Dated IT systems and data security measures
• Inadequate data security leads to leakage of sensitive
guest data such as credit card details, passport details
and other financial transactions
• Free availability of cash and extensive use of credit cards
• Presents an opportunity for cash larceny
• Complex business structures and discretionary processes
• Increases propensity of manipulation of financial
reporting
• Frequent use of subcontractors
• Increases fraud risks and heightens risk of employee
collusion with third party vendors and contractors
• Winning government contracts and/or to stay in favor with
regulatory agencies
• Induces negative industry practices such as gifting
complementary hotel stay and car travel to government
officials
2 | Managing fraud, bribery and corruption risks in the hospitality industry