Weekly Blog 9 - Preventing fraud and risk management

The risk of fraud has drastically increased as a result from the development of social media and online trading, individuals are cautioned on fraudulent activity while they are on the internet. On the other hand, organisations do not face the same level of risk, but instead harbor a greater risk of fraud

An individual only has to worry about their own actions and the protection they put in place, whereas, an organisation has take into consideration the actions of internal and external parties in addition to the information system implemented with the correct mechanisms to prevent fraudulent activity. From past blogs, employees both higher and lower management will commit fraud under the right circumstances if there is enough pressure, opportunities and rationalisation present. External parties such as vendors can commit fraud colluding with employees to create false invoices. A major deterrent to fraud and corruption are the Internal Controls, a poorly implemented system will only assist in the increase risk of fraud.

As an individual, in my experience with fraud relating to social media and online banking, the risk is there but it is a risk I am willing to take as these things has become a way of living. The severity might be catastrophic on the Risk Assessment Matrix but the probability is perhaps seldom, as compared to an organisation which would most likely be likely or frequent.. To minimise these risks, it's important to have defense mechanisms put in place, such as strong passwords, use official websites and apps for Facebook/Banking and code tokens for online banking.

My recommendation to organisations is to follow or integrate one of the Australian documents relating to fraud prevention and risk management, for example, Standards Australia AS 8001-2008, Commonwealth Fraud Control Guidelines (2011) or COBIT 5. More specific recommendations would be a Code of conduct when dealing with online trading or social media and certainly the Corporate governance, making sure fraud prevent and risk management is implemented throughout the organisation.

Relevant links

Standards Australia AS 8001-2008
http://www.saiglobal.com/PDFTemp/Previews/OSH/AS/AS8000/8000/8001-2008.pdf

Commonwealth Fraud Control Guidelines (2011)
http://www.ag.gov.au/Publications/Documents/CommonwealthFraudControlGuidelinesMay2002/Commonwealth%20Fraud%20Control%20Guidelines%20March%202011.pdf

COBIT 5

http://www.isaca.org/cobit/pages/default.aspx