That is the staggering amount of money and to put it into perspective, its greater than the GDP of all but 11 countries in the world. But it is the amount of money lost annually because of fraud. That amounts to roughly $3.2 million per second and only accounts for the money lost by banks globally. This doesn’t include other sectors like pharmacy, agriculture, manufacturing or others. One can only imagine the total amount of money we lose due to fraud.
This is also troublesome for any company since they lose a substantial amount of revenue due to such nefarious activities. According to a study, on an average a company loses 5-10% of their revenue due to fraud.
It would be easy to blame hiring managers or human resource professionals for hiring the wrong staff or not conducting proper background checks but information of any prior convictions for fraud can be hidden intelligently by potential employees. The need for thorough background checks is more important now than ever.
That will reduce the risk of being a victim of a fraud. According to behaviorists, the people who initiate such activities often show traits that can be identified and steps can be taken beforehand to prevent any mishaps. All it takes is proper initiative and giving attention to the employees when required.
In addition, technology could provide the answer. The internet has provided a robust backbone to track users. Online activity leaves a proper trail and can be evaluated. Various anti-fraud products monitor your online activities in order to determine whether you are or could be involved in some sort of malicious actions. They also track corporate accounts and raise a red flag if they find something suspicious.
These packages are built using the same set of guidelines and procedures that are used for detecting fraud in a company. The advantage of having an IT tool do all the policing is that you don’t have to use any human resource for the task. The red flags raised will be notified to appropriate authority who can take suitable action to prevent any damage. This reduces the manual labor that goes into the detection of fraud and it also eliminates manual error from the system. A few examples of such software are FICO and FROPS.
FICO relies on its predictive analytics to capture the maximum number of frauds and reduce the false positives. Another product monitors and analyses user activity and behavior at the application level (rather than at the system, database or network level) and detects fraud within the system. FROPS provided by Salviol boasts its analytics algorithm, ability to integrate with a third party and highly insightful data reports.
With global GDP increasing at a rate of 3.5% annually, the figure of $1.7 trillion is only going to increase substantially. Every company must take the most decisive steps to ensure that money lost during fraud is minimized and instead used to fund research and development.