Fraud Resilience - Your Cornerstone in a “Perfect Storm”
Advanced manufacturing and automotive-adjacent industries are operating under sustained cost pressure, unstable supplier landscapes, and decentralized decision-making. This combination creates what forensic professionals refer to as a “perfect storm”—a set of conditions that reliably stretches internal controls to their breaking point.
Drawing on our investigations and fraud resilience assessments, we present two behavioral archetypes that frequently emerge under these pressures. Our aim is to help you understand what motivates internal fraud, identify key red flags, and give you a practical tool to evaluate your organization’s readiness. You’ll find a “quick & dirty” self-assessment checklist at the end to help you get started.
Behavior Archetype #1 – The Superman
A Tier-2 supplier shows signs of financial distress: late deliveries, requests for early payments, and a shrinking quality buffer. Sourcing cannot replace them quickly without risking a line stop. The plant controller—our “Superman”—decides to “buy time.”
He approves a tooling prepayment outside policy, routes two emergency purchase orders (POs) to a related “bridge” vendor with the same ultimate beneficial owner (UBO), and instructs the clerk to post a goods receipt (GR) on delivery of a partial fixture (or backdated to meet month-end) so that the three-way match (PO ↔ GR ↔ invoice) will authorize payment. He also splits an additional order into three smaller POs to stay below a dual-approval threshold.
The cash injection keeps the supplier afloat for a few weeks, and production continues. But then the Tier-2 files for insolvency. The prepayment is largely unsecured—there is no escrow, no performance bond, and no milestone-based evidence. The partially delivered tool cannot be capitalized, and the company records a direct financial loss.
Behavior Archetype #2 – Exit Strategy
A category manager oversees a mid-size commodity involving frequent engineering changes. Over several months, he builds a vendor network that includes a new “specialty” supplier for urgent work and a small consulting firm for technical validations. The specialty vendor shares an address with a known subcontractor; the consulting firm is owned by a relative through an intermediary.
He routes spend through pilot orders and change orders, keeping each transaction below sourcing thresholds. Unit prices gradually increase through variation orders, justified as design tweaks. He also influences master data: creates vendors himself, assigns a generic industry code, and omits UBO details.
He is not formally resigning but talks about "market opportunities," accrues unused vacation, and rotates responsibilities so no single approver sees the full picture. When Internal Audit announces a thematic review, he transfers to another business unit and resigns weeks later. Losses surface after he’s gone.
Quick & Dirty Self-Assessment Checklist
A fast way to evaluate whether your controls cover key pain points. If you answer "No" to any question below, that area may warrant further review or automation.
Closing
Fraud resilience is the ability to operate under pressure without having to worry about people bending the rules. It’s built by identifying control seams where exceptions happen, connecting data across suppliers, payments, tenders, HR, and finance, and practicing what to do when red flags appear.
The two archetypes—the Superman and the Exit Strategist—will show up again in different forms. With targeted testing and clear response playbooks, your organization will spot them early and act before the damage is done.
If you're looking for a simple place to begin, take the Quick & Dirty Self-Assessment, choose 3–5 areas aligned with your pain points, and run them weekly for one month. Track hit rates, fine-tune thresholds, and—most importantly—most importantly - address the root cause each finding points you to. That’s how you move from one-off fixes to a system that truly protects your business.
