Fraud: Inside Jobs

What’s a fraud enabler?  It’s an insider who commits or assists fraud.

In the UK, 60% of fraud is insider activity according to the UK Annual Fraud Indicator Report.  Published in March 2012, is full of facts and figures.  Since it cost UK business £45.5bn last year, it’s worth knowing more.  A serious fraud can cripple an organisation; sometimes it can kill them (think Nick Leeson and Barings Bank).

  • £26.7bn was lost to large businesses and £18.5bn to small and medium enterprises (SMEs)
  • 46% of respondents said their organisations were victmims of fraud last year
  • 49.5% of fraud was committed by employees or volunteers
  • 41.9% of fraud was cyber enabled
  • 34% of organisations said that employees were responsible for their largest fraud last year
  • 10% of employees dismissed for fraud were deemed as ‘high rish’ with 4.5% likely to be involved with serious organised crime.

Fraud is generally under reported, and some insider fraud can be avoided with decent staff vetting procedures.

Every organisation needs to consider it’s vetting procedures.  Employers are already liable if they don’t check their staff are eligible to work in their country: most require sight and a copy of the staff members passport and permit to work (if appropriate) on or before their first day of work.  Employers are also at liberty to take references.  Ensuring referees are appropriate, references are acceptable, and – most importantly – references are are another weapon in the potential vetting arsenal.  Even if your organisation doesn’t take other special steps before staff begin work (such as criminal record checks or using a specialist company), a known procedure for reporting suspicious behaviour may be considered a sensible measure.

Of course, for many business continuity planners, fraud doesn’t strictly fall inside their remit.  However, if a fraud causes a continuity issue, you’re the person responsible for ensuring there are plans to keep the organisation going, so you’re going to want to have considered it all in advance!

National Fraud Office Annual Fraud Report March 2012


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