How corporate fraud investigation can help render a fool-proof analysis?
- April 29, 2022
- Posted by: Raghav
- Category: Blogs
Is your business equipped to deal with the after-battle of corporate fraud?
The Corporate world is always in a vulnerable position of being the victim of fraudulent activities that dents its financial stature and ruins the business reputation entirely.
A classic example of corporate fraud, which shook the nation’s businesses to their roots was the Satyam Accounting Scam in early 2009. One of the most prominent and biggest corporate frauds in India was dubbed India’s Enron and remembered by all. Our country then transpired the need for corporate fraud investigation to bring the perpetrators to books.
With a rise in digitalization, this vulnerability has escalated to more cutting-edge threats penetrating into the systems and crippling them in the process.
While most companies have realized this impeding force and deploy state-of-the-art technology to contain such breaches from attacking, corporate crimes still happen. What companies miss in the loop of early detection of corporate fraud and its prevention, is the inclusion of corporate fraud investigation that can trace back the fraudulent activity to its source.
This is where corporate fraud investigation and the professionals provide an organization, with a thorough analysis of the originating point of the fraud.
But is that all? Let’s find out!
What is corporate fraud investigation in an organization?
Many businesses misconstrue corporate fraud investigation as the analysis of criminal activities that usually encompass an individual’s life while limiting it to police work.
Corporate fraud investigations encapsulate the process of examining whether the scam or fraud has taken place and collecting evidence to save the interest of the victims involved.
To locate assets owned or used by the defendant and then identify the use of properties that could be restrained, corporate fraud investigations secure misappropriated assets. It is a concentrated approach that incorporates only the succeeding activities in the face of fraud rather than offering a predictive analysis. It goes by the principle of ‘hoping for the best but preparing for the worst.
It extends to investigating financial fraud, employee fraud, customer fraud, insurance fraud, misappropriation of Assets, vendor fraud, and investment scams.
What encompasses the corporate investigation framework?
It is a capital mistake to theorize before you have all the evidence. It biases the judgment!
Corporate fraud investigation is a massive process that encompasses the analysis after a breach of data security, any information theft from the company, a compromise of customers’ information from the company’s database, or any other kind of reputation loss. Usually, fraud risk investigation services follow a standard set of steps as per the protocol to assess fraud.
1. Fraud Risks Assessment and Identification
Corporate fraud is usually a planned activity that can attack any vertical of the organization on a small or large scale. This focuses on the fraud risk assessment steps that concern the operations, transactions, and the respective organizations’ overall business model, policies, and adopted processes. A corporate fraud investigator examines and scrutinizes the operations to perform root cause analysis on the fraud, misconduct, or embezzlement in an organization.
2. Estimation of Fraud Risk Level
It is just a haywire zero-focus approach system with no risk quantification.
So, including this vital factor in the corporate fraud investigation landscape, the risk levels are bifurcated using an impact matrix. The risk matrix quantifies the level into High, Medium, and Low categories connected to the respective organizations’ risk exposures. Once the categorization is concluded, the control gaps are mapped to provide independent insights to the management.
3. Fraud Risk Mitigation
The successful implementation of the preceding step allows for accurate identification of the fraud risk mitigation strategies in corporate fraud investigation. These are suggested based on the industry best practices and international standards.
4. Review and Surveillance of Fraud Risks
This step of a corporate fraud investigation is a focused approach toward developing sustainable processes to combat fraud Risk through extremely collaborative models and projects that promote the transfer of skills and knowledge to the organization’s team members.
This calculated approach to corporate fraud investigation also provides a comprehensive image of the organization to avoid costly mistakes in future. The entire landscape of corporate fraud investigation saves the company its time, effort, financial status, and most of all, its reputation.
Why do you need corporate fraud investigation?
Imagine investing your talent, finances and time into your business idea only to find it hanging midway after an inevitable fraud incident. Wouldn’t you want to know who did it and why to contain its future recurrence?
If your business is a victim of fraudulent activity, it might lose a considerable amount of money, cause a dent in its reputation and lead to a loss of trust as well as investors. Therefore, to successfully prosecute the frauds and get the compensation that businesses truly deserve, a robust corporate fraud investigation service needs to identify defendants and trace misappropriated assets.
It also carries the advantage of guiding the precise evidence required for the prosecution of the uncovered fraudulent activity, to aid in future incidents.
Netrika: Averting future incidents of fraud with corporate security certification?
Netrika, with its global vision of understanding and mitigating risks across business verticals, takes a step further in the domain with an extensive list of training programs. Its certificate in corporate security management studies (CCSMS certification) introduces the professionals to the vitality of using annual Corporate Security Management Trends to prioritize their Security Programs, budget, and resources.
Our unique blend of expertise is well equipped to settle the most challenging external and internal fraud issues and customize solutions based on the business strategy and future approach. Our corporate fraud investigation services will help develop a fraud risk management framework that aids in mitigating fraud risks and thefts.