The Cynic’s Top Ten of ‘Why have we failed?’
An Update From B4 Investigate
Over the past few decades, have we, as a race, failed to stop the rising costs of fraud, and if so, what can we learn for 2021? Here are our “no holds barred” top reasons starting with No 10:
10. We over-complicate matters: We treat fraud as the exception rather than the rule, and we’ve let the specialists take over.
9. We blame the developing countries too much: We pretend that fraud mainly happens in poorer countries. However, fraud representing 3% of GDP per capita in an affluent country costs more than 25% of GDP per capita of a poor country.
8. We over-rely on computers: We leave it to artificial intelligence using “big data” to find fraud for us. However, fraud is still so human that we need humans to find it.
7. Zero Tolerance: If we apply zero tolerance to the letter you would have to lock almost everyone up! Many fraudsters might make amends if only the thresholds were lower.
6. Dirty Money: The world is awash with so-called dirty money, but we are miles behind the people who produce, hide and use it.
5. Obsessive Compliance Disorder: We have become a race of people who simply tick boxes without reading details.
4. A desire to admit fraud exists, but not see it your own backyard: Whilst most people accept that fraud costs a lot, they are reluctant to accept it as the case in their organisation.
3. Panicking at the last minute: Management oscillate widely between doing nothing about fraud and leaving it to the box tickers, and mad-panic when they feel they’ve lost control.
2. Waiting for the whistleblower: Has the advent in recent years of whistleblower lines resulted in a culture of “let’s not bother to really look for fraud anymore, because in the end, some poor person will stick their neck out and say something”?
1. A false sense of security and reliance on C.R.A.P: C is for Codes of Conduct, in the knowledge that they are rarely read. R is for Risk analysis which regularly ignores risk of fraud. A is for annual Audits, which in reality rarely discover fraud, and P is for Policies and Procedures, which whilst a necessary evil, no one has the time to read leading to lots of words and little action.
Sorry about the “negatives” but sometimes, it is important to face up to the facts. The costs of fraud are rising, and in the COVID Credit Crunch which is surely to come in 2021, we really need to buck up our ideas to stop the wasteful costs of fraud. In our next article we will examine 8 fresh and positive ideas to stop fraud.
The above list is edited from a forthcoming book on Fraud to be published in 2021. One of the authors is a co-founder of B4 Investigate, originators of ‘B4 PreCrime’, a unique self-defence solution that was developed through proven and proprietary algorithms, to help companies find and remove fraud at an early stage. As well as B4 PreCrime, the company hosts knowledge sharing community forums, provides on-line courses and undertakes fraud investigations.
Anil Iyer
UK Director, B4 Investigate Ltd