Organisations need to be on their guard more than ever to ensure they can effectively monitor the ethical business conduct of their employees, and have the right cover in place when things go wrong.
EY’s 12th Global Fraud Survey showed boards and audit committees continue to face challenges in tackling the risk of fraud, bribery and corruption in their business.
While many companies do the right things to minimise the risks the survey revealed there are significant weaknesses in many organisations’ responses. The use of forensic data analytics is occurring to infrequently and irregular robust compliance checks were the most concerning.
Zurich Financial Services Australia Head of Financial Lines Stephen Bonnington said companies need to align adoption of new technologies with risk controls to help protect them.
He said companies need to adopt and modify acceptable use policies and raise security awareness within the firm to help combat fraud.
“If companies use cloud computing-based services, greater investments of time need to be made in the contract-management process and conducting adequate due diligence on service providers,” Bonnington said.
Bonnington says culture and behavioural elements within the company are also important. The promotion of strong ethical values and integrity throughout the organisation can dissuade improper business acts.
Having the right insurance in place is also significant. Companies need to invest time and energy with their broker and underwriters to ensure the underwriters have a very clear understanding of the client’s business.
“Companies must articulate in detail their risk management procedures and internal controls,” Bonnington added. “The greater the understanding, the more likely that the cover will be as broad as possible.
“Crime insurance is certainly a useful tool in a company’s arsenal, when attempting to mitigate the financial effects of a fraud,” he said. “It should be viewed as complementary to a company’s investment in its own internal control processes which would be the first line of defence.