Every company must have a deliberate plan to prevent and detect fraud and should never underestimate the potential of an attack from within. According to a recent report to the Nations on Occupational Fraud & Abuse, the typical organization loses 5 percent of revenues each year to fraud.
To learn how to prevent fraud, first understand the types of fraud companies are most likely to encounter. The three major categories are: asset misappropriation, corruption along with asset misappropriation, and financial statement fraud. While the different types have their own characteristics and red flags that they could be occurring, each has the potential to devastate a business financially and damage its reputation.
According to a recent study, of the three primary categories of occupational fraud, asset misappropriations are by far the most common, occurring in 89 percent of the cases in the study. However, they are also the least costly, causing a median loss of $114,000.