Fraud Risk Management and organisational fraud in the wake of COVID-19

As companies operate on an unstable ground with changes in business modalities, relaxed controls, and new ways of working, they will also deal with new and increased vulnerabilities in certain avenues as a result of the new operating model and a stressed global economy. Organisations, and resultantly employees, are under pressure—the pressure of survival for businesses and performance for executives, financial pressure from accumulated debt and uncertain earning, anxiety and disgruntlement at possible pay cuts and job loss, and so on. Such pressure (a key element of the fraud triangle) may muddle one’s perception of acceptable and unacceptable behaviour, manifesting in the actions of individuals within an organisation, as well as external parties such as vendors, partners, and customers. Such moments of vulnerability are also times when (unrelated) unscrupulous parties look to exploit unsuspecting organisations/individuals for personal benefit.

Historical data[1] also indicates that the recession that began in 2008, resulting in a significant increase in lawsuits based on fraudulent loss. It is possible that this may also happen with other companies/geographies in the current economic climate.

This document highlights some key considerations for organisations from a fraud vulnerability and preparedness standpoint during this time.