Week 2: How Can Governance Combat Fraud?

I disagree with this statement simply on the fact it says "all" they have to do is pick the right employees. Whilst this is one factor in preventing/combating fraud, it extends far past who you hire and fire. Culture is engrained deeply in a business, surviving generations of employees - if there is a culture of nonchalance and dishonesty from the top, this winds its way down to the mailroom assistants. Behaviour must be exemplified from senior management (ISACA, 2012).

If governance isn't used, there may be little to no awareness of the risks in the particular industry, as well as no awareness of assessing fraud risk. There would be no controls in place to assess and stop particular fraud risks, meaning it would fly under the radar or be hidden in plain sight (Davis & Pesch, 2013). From an organisations perspective this would show other companies that they are unprepared, and as such no one would engage in business with them.

The company I work for has a five-factor corporate governance policy, emphasising early detection of fraud risk from employee's and claimants. Because I work in insurance, fraud management is a major element of our work - identifying potential fraud and reporting it to the relevant authorities. As a claims consultant/adjuster, it is my responsibility to be vigilant in identifying possible fraudsters attempting to claim. Some policies that enable us to settle customers' catastrophe claims without sighting a quote are a major risk for fraud (Viaene & Dedene, 2004).  If we didn't have corporate governance, fraud indicators would be missed, and money lost.

(260 words without references)

Davis, J., & Pesch, H. (2013). Fraud dynamics and controls in organisations. Accounting, Organizations and Society, 38, 469-483.

ISACA. (2012). COBIT 5: A Business Framework for the Governance and Management of Enterprise IT, pp79.

Viaene, S., & Dedene, G. (2004). Insurance Fraud: Issues and Challenges. The Geneva Papers on Risk and Insurance, 29(2), 313-333.