Managing Fraud Risk: A Practical Guide for Directors and Managers

Fraud Prevention Controls

Introduction

Most organisations rely on a variety of controls and procedures to manage their fraud risks. Very often this is not the result of careful, structured planning, rather it is simply the way that controls within the organisation have evolved and developed over time. This of course comes back to one of the central themes of this book, which is that, for the most effective fraud risk management, organisations should focus first on developing a proper understanding of risk and only then on designing controls that are proportionate and appropriate to the risks.

Sometimes, however, for certain organisations, it is the combination of generic controls and specific anti-fraud measures that can work best, especially when they are well-suited to the corporate culture of the business.

Charles gave me a good illustration of this during our interview. He is not a fraud expert and I spent some time in the interview encouraging him to think of the various ways that the very large US organisation that he used to work for in the 1990s as head of their European Strategy Team actually managed its fraud risk. Once prompted, he came up with a very cogent explanation that serves as a good introduction to the themes of this Chapter. This is what he told me:

Well, there are good disciplines aren't there? Segregation of duties being an obvious one and I remember clearly that there was a lot of attention on this. We worked very closely with our external auditors to ...