Addressing Fraud Risk Management with Facts
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Fraud is identified and caught with the aid of facts. Facts give a deeper understanding to what you could be looking at in your organization. Facts have also given rise to the mnemonic that Fraud is Always Committed by Trusted Souls. As simplistic as it may seem, it holds key to a potential trigger. Are you equipped with the necessary tools to address this challenge? Is your organization equipped with fraud Risk Management? Here are some quick slides to take you through what you need to have.
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Addressing Fraud Risk Management with Facts
- 1. Embedding Fraud Risk Management
- 2. Frauds occur due to… Incentive or Pressure (68%) ? Attitude or Opportunity Rationalization (18%) (14%) 2
- 3. … and can encompass any industry… • Misappropriation of cash by fudging accounts or opening fictitious a/c Banking Frauds • Withdrawal from deposit accounts through forged documents. • Trading on incorrect positions or outstanding unmatched trades Trading Frauds • Errors in Booking and settlement of trades • Account payable and Account receivable frauds Financial Frauds • Easy access to blank checks, facsimile, and manual check preparation • Unaccounted purchase order numbers or physical loss of purchase orders Sourcing & Procurement Frauds • Vendor collusion with employees • Access to card numbers esp. in customer service or for processing Credit Card Frauds • Online misuse/Phishing • Excessive inventory write-offs without documentation or approvals. Inventory and Production Frauds • Consistent production overruns beyond sales demand and backlog orders 3
- 4. …resulting in reputational and financial disruption Source: Fraud Intelligence Report-2nd Quarter -2011 published by Mark Monitor 4
- 5. How do we mitigate fraud? 5
- 6. Embed “fraud” in the risk framework… • Business Model Strategic Business • Technology Obsolescence Change • Change Management • Market/ • Geo-Political Credit • Reputation Industry • Product development Counterparty Country Risks • Pricing Data Protection, Business • Information & Physical Security privacy Continuity • Registrations & Taxations Enterprise and IP Engagement • Legal & Contractual Regulatory Security Compliance Compliance • Customer needs & Concentration External Fraud Physical & Execution • Infrastructure Environmental Management • Leadership & Culture Operational Employment Risks • Operation Efficiency Internal & Work Business Business Fraud place Safety Interruptions Practices • Knowledge capital 6
- 7. …create deterrence… IDENTIFICATION Fraud Vendors/ Detection Govt. Partners MITIGATION REVIEW Fraud Deterrence Fraud Fraud Prevention Response Customers Employees CONTROL 7
- 8. ... and have structured governance using Culture & Policies Structure & Process Systems & Legislation Capabilities Enterprise Standards Control Definition across Internal Audit Team Cyber protection Operational Policies functions Internal and external IT act Disciplinary Policy Control Self Assessment Vulnerability Testing Data protection laws and & 3rd party review of Disciplinary Process governance Awareness Programs & Controls Training Modules Analytics and Forensics Incident Handling Whistle blower Domain & subject matter Scenario planning & expertise Code of Conduct Testing Trigger and red flags Internal Audit 8
- 9. Infosys approach to manage fraud Process Map of Risks for all businesses Failure analysis across functions 1 Set Triggers Key Risk Indicator Likely Changes Loss Approach Estimation and Benchmarks Consequence Severity 3 Mode Analysis Level of Severity 4 Control Log review & Control Levels and Cost of control definition Failure Analysis 2 review considerations Incident Inventory from past experience Process Level Risk Assessment and Mitigation 9
- 10. Fraud management – Maturity Model Monitor Check Continuous Monitoring and Auditing Using Software's Act that trigger alerts techniques for - High value and creates reports transactions Establishing pre for financial defined values or processes attributes (Red Flags) Identify & Plan Creation of Fraud Management Checklist for the process and identifying the fraud prone areas and implementing appropriate controls 10
- 11. To Summarize… • Embed the culture of “risk” within the organization • Enable the organization to own “risk” • Have a Risk Reporting mechanism where all employees can report risks they see • Have an Incident Handling system that focuses on root cause analysis rather than closure • Have systems and analytics in place to monitor triggers and “red flags” 11
- 12. THANK YOU www.infosysbpo.com The contents of this document are proprietary and confidential to Infosys Limited and may not be disclosed in whole or in part at any time, to any third party without the prior written consent of Infosys Limited. © 2012 Infosys Limited. All rights reserved. Copyright in the whole and any part of this document belongs to Infosys Limited. This work may not be used, sold, transferred, adapted, abridged, copied or reproduced in whole or in part, in any manner or form, or in any media, without the prior written consent of Infosys Limited.