Importance of Fraud Risk Management

Importance of Fraud Risk Management

Fraud Risk Management (FRM) is the means by which organisations adopt ethics and compliance programs and related antifraud controls. More than ever companies are operating in a complex global business environment. They are drowning in a sea of digital data, adapting to the perils of doing business in new markets, struggling to comply with increased regulation and trying to avoid costly enforcement actions and litigation.

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In KPMG’s 2015 Global CEO Survey, 73% of the CEO’s interviewed identified regulatory environment as one of the biggest issues impacting their companies.

 

Experienced leaders are asking themselves some fundamental questions:

 

  • What are the fraud and misconduct risks we should be most concerned about?
  • How do our risks differ across our business units, geographies, and processes?
  • How can we better leverage technology to see the early warning signs of fraud?
  • What have others in our industry found to be effective?

 

An effective fraud and misconduct risk management approach has three (3) objectives:

 

  1. Prevent instances of fraud / misconduct from happening in the first place;
  2. Detect instances of fraud / misconduct when they occur; and
  3. Respond appropriately and take corrective action when integrity breakdown arise.

 

However the challenge for companies is to develop a strategy that helps them:

 

  • Understand the various regulatory and evaluative frameworks that apply to them;
  • Ensure that controls such as risk assessments, codes of conduct, and whistle-blower mechanisms are in place; and
  • Create a detailed ethics and compliance program.

 

An FRM program will not only help enable appropriate compliance with legal and regulatory mandates but also help the organisation align its corporate values and performance while protecting assets and driving aligned organisational behaviour.

© 2017 KPMG Advisory Services (Namibia) (Pty) Ltd, a Namibian company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The information contained in this newsletter is of a general nature and should not be used or relied upon as a substitute for detailed advice or as a basis for formulating business decisions. Please contact the writer for advice relating to your specific circumstances. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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