March 07, 2017
Recent statistics show that a fraud prevention strategy is more important than ever.
For several years now, the acknowledged cost of fraud to organizations has been 5% of revenues. But new research has shown the cost is rising.
According to the Financial Cost of Fraud 2017 report, which used research done in 10 countries including the U.K. and the United States, the average loss caused by fraud and error in the workplace increased from 4.57% to 6.54% in the 2014 to 2016 period. The report showed that overall annual losses are up 43% since 2008.
Legislation can help. In the U.S., the Sarbanes-Oxley Act protects investors from fraud. The Improper Payments Elimination and Recovery Act of 2010 keeps tabs on fraud and error costs. Solutions: Stay up-to-date about legislation. Organizations can also call on governments and industry organizations to enact legislation and guidelines that will help. In the U.K., for example, there’s been a call for legislation to ensure all businesses have a dedicated employee responsible for security issues in the workplace.
Senior management has a vital role to play in mitigating data breaches. In earlier research, almost half of small business owners admitted to having no employee responsible for data security. Solutions: Appoint a Data Security Officer who helps create a culture of security. Designate Security Ambassadors too. The Shred-it State of the Industry Report 2016 reported they can help strengthen commitment to information security at all levels and departments.
Employees are considered to be the first line of defense. Solutions: On-going security awareness training helps to empower employees to protect confidential information they handle in and outside of the workplace. Teach employees how to identify behaviors associated with workplace fraudsters, and provide a tips hotline. Conduct unscheduled workplace audits.
All consumers in general should understand the importance of information security to protect themselves and their families against becoming a victim of identity theft and identity fraud. Solutions: Campaigns such as National Consumer Protection Week in the U.S. and Fraud Prevention Month in Canada speak directly to consumers. Some of the ways to prevent fraud include: Be extra cautious about ‘amazing’ offers received by phone, email, etc.; always verify the validity of a company that contacts you; never disclose personal information to a business that can’t prove it is legitimate.
Businesses put themselves at risk if they are not prioritizing data security in the workplace. Solutions: Create information security policies and procedures, and embed data security into the workplace. Schedule document disposal with a reliable destruction leader that provides services to securely destroy both paper and hard drives. Implement a Shred-it all Policy so that all documents are destroyed prior to disposal or recycling.
Find out how data security best practices can reduce the cost of a data breach – and better protect an organization.