Empowering Employees to Spot and Report Fraud

Tom

Welcome to our podcast, where we empower HR professionals to create safer and more transparent workplaces. I'm Tom, an HR specialist, and today we're joined by the incredible Kimberly, our host. Today, we're diving into the world of fraud detection and prevention. So, Kimberly, what’s the first thing we need to understand about fraud in the workplace?

Kimberly

Hi, Tom! Thanks for having me. The first thing we need to understand is the impact of behavioral red flags. Did you know that 84% of all fraudsters display at least one behavioral red flag? These red flags are like warning signs that, if caught early, can save companies a lot of money. For example, excessive pressure from within the organization can lead to a median loss of $617,000. That’s a staggering amount!

Tom

Absolutely, Kimberly. And it’s not just about the money. These red flags can also indicate a toxic work environment. For instance, a 'wheeler-dealer' attitude, which is a red flag associated with a $350,000 median loss, can often lead to unethical behavior and manipulation. How can HR professionals spot these red flags early?

Kimberly

That’s a great question, Tom. One practical way is to look for patterns in behavior. For example, if an employee is consistently making decisions that benefit them more than the company, or if they frequently push unrealistic deadlines, these could be red flags. It’s also important to create a culture where employees feel comfortable reporting such behaviors. Speaking of which, did you know that longer fraud schemes, while fewer in number, result in much higher median losses? Fraud schemes lasting over 60 months can lead to a median loss of $875,000. That’s why early detection is crucial.

Tom

Absolutely, Kimberly. Early detection is key. But how can we ensure that employees are equipped to spot these signs and report them effectively? I mean, it’s not just about catching the fraud; it’s about cutting it off fast to minimize the damage.

Kimberly

Exactly, Tom. One of the most effective ways to do this is through employee training. Did you know that 63% of employees and 62% of managers and executives receive fraud awareness training? Organizations that provide this training suffer losses that are only half the size of those that don’t. Training helps employees understand what to look for and how to report it. For example, a simple training session could teach employees to recognize the signs of bullying or intimidation, which is associated with a $300,000 median loss. And it’s not just about the training; it’s about creating a culture where reporting is accepted and encouraged.

Tom

That’s a fantastic point, Kimberly. Creating a safe reporting environment is crucial. Employees are more likely to report fraud if they can do so anonymously. For instance, web-based reporting methods are preferred by 40% of employees. But what about those who prefer other methods? How can we make sure they feel comfortable reporting?

Kimberly

That’s a great follow-up, Tom. It’s important to offer multiple reporting channels. For example, while web-based methods are popular, some employees might prefer to report via email or even in person. The key is to ensure that all methods are confidential and protected. We can also use high-visibility spaces to post fraud awareness information, like posters in break rooms or newsletters. This way, employees are constantly reminded of the importance of reporting and how to do it safely.

Tom

I love that idea, Kimberly. It’s all about making fraud awareness a part of the daily work culture. Speaking of which, what are some fun ways to keep employees engaged and informed about fraud prevention? I’ve heard of some companies using team-building activities to teach these important lessons.

Kimberly

That’s a fantastic idea, Tom. One example is to host annual refresher events that double as team-building activities. For instance, you could set up a 'fraud detective' challenge where teams compete to identify and track down simulated fraud schemes. The team that spots the fraudster the fastest wins a prize, like a team dinner. This not only enhances awareness but also builds camaraderie and trust among employees. It’s a win-win situation!

Tom

That’s brilliant, Kimberly. So, what are some actionable steps that HR professionals can take to address red flags and create a more transparent workplace? I mean, it’s one thing to talk about it, but what can we actually do?

Kimberly

Absolutely, Tom. One of the key steps is to be an advocate for employees when excessive pressure from management exists. Communicate the importance of setting the right tone at the top. For example, if you notice a manager constantly pushing unrealistic deadlines, address it with them and explain the risks. Another important step is to foster an open door policy. Employees need to feel safe to report issues without fear of reprisal. We can also take complaints of bullying or intimidation seriously and follow up with thorough investigations and continuous monitoring. It’s all about creating a culture of trust and transparency.

Tom

Those are excellent points, Kimberly. But what about new employees? How can we ensure they are aware of fraud prevention from day one?

Kimberly

That’s a great question, Tom. Onboarding is crucial. We shouldn’t relegate fraud awareness to a blip in the employee handbook. New employees need to be familiar with the importance of fraud awareness and how to report tips confidentially. Training should include understanding how the company functions, routine procedures, and expected behaviors. We can also use high-visibility spaces to post and routinely refresh fraud topics where staff are likely to see. Information should be distributed routinely on how they can report tips in email newsletters and employee portals that can be accessed outside the workplace where they may feel more comfortable reviewing their reporting options.

Tom

Absolutely, Kimberly. And what about background checks? How can we ensure we’re bringing in the right people from the start?

Kimberly

That’s a critical step, Tom. We should perform thorough background checks on incoming employees. Call prior employers and ask questions regarding behavior and personal interactions. Consider performing police record checks for those with high levels of access to sensitive information or assets. It’s all about minimizing the risk from the very beginning. By taking these steps, we can create a safer and more transparent workplace.

Tom

Thanks, Kimberly. This has been an incredibly insightful discussion. It’s clear that by staying vigilant, providing proper training, and fostering a culture of trust, we can significantly reduce the risk of fraud in our organizations. Thanks for tuning in, everyone. Stay safe and keep an eye out for those red flags!

Kimberly

Thanks, Tom. And thank you, listeners, for joining us. Until next time, stay informed and stay vigilant!