Managing Fraud Risk: A Practical Guide for Directors and Managers

Opening Remarks

That was my introduction to the world of fraud and it points to one of the main reasons for writing this book. Most of the directors and managers that I work with today seem to have no more understanding of fraud and its key characteristics (what it is, who commits it and why, what are the most effective controls to prevent and detect it and how to investigate it to obtain the best results) than I did back in 1990. Fraud remains a blind-spot so far as most businesses are concerned. This is both frustrating and almost unbelievable given the extent of the risk that fraud poses to the profits and reputations of every organisation and also the proven methodologies that exist today for reducing this risk.

It might seem surprising that when I started work on the Polly Peck case I had only the vaguest ideas about corporate fraud even though at that time I had been a qualified chartered accountant for over seven years. Please remember, however, that the times were very different then and that financial crime, although it has of course always existed, was not looked at with the same analytical rigour that it is today. Since 1990 there have been many corporate fraud scandals that have hit the headlines and shaken investor confidence around the world: Polly Peck, Barings Bank, Enron, WorldCom, Allied Irish Banks, Parmalat, Société Générale, Hollinger, Refco, Galleon, Satyam and Madoff to name but a few. These headline cases did much to initiate and influence changes in financial ...