Creating a Strong Corporate Culture Begins With Managing Fraud Risk

Creating a Strong Corporate Culture Begins With Managing Fraud Risk

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Assessing the Results of the 2018 White-Collar Crime and Fraud Risk Survey

While a strong corporate culture is no paint-by-the-numbers exercise, a number of vital components must be carefully aligned — namely, ethical behaviour, tone at the top, mood in the middle and attitude at the base. These elements can be seen as similar to a painter selecting and painstakingly applying just the right mixture of colours and textures to transform the canvas into a work of art. They are of critical concern in today’s boardroom and C-suite. Companies are striving to introduce a measure of introspection to better understand the correlation between culture and ethical failures involving fraud, corruption and misconduct. Key to this movement toward enhanced levels of organizational maturity are growing efforts to measure culture, flag warning signs, make control improvements, address gaps, build awareness of fraud and misconduct risk, and avoid becoming the next headline featuring organisational breakdowns that can derail brand, reputation and long-term viability.

Given the inverse relationship between culture and fraud, where a poor culture leads to high rates of fraud, the results of the latest White-Collar Crime and Fraud Risk Survey from Utica College and Protiviti reveal some troubling trends that should raise concerns for boards of directors and executive leadership.

 

Notable Takeaways from this Year’s Study:

  • Survey findings appear to align with “compliance fatigue” and, to a certain extent, complacency that many organisations face.
  • Organisations continue to lag in employing leading practices to build a strong culture.
  • Resources represent a significant challenge in building a strong corporate culture with a clear fraud risk strategy.
  • Many organisations lack a fraud risk management programme, including policies to mitigate fraud.
  • Third parties represent a significant gap in fraud risk management

 

2018 White Collar Fraud Survey Infographic

Additional Findings:

  • 16% of organisations overall have no senior management professional designated with ownership of and responsibility for fraud risk management.
  • North American organisations look relatively less concerned about well-defined risk strategies than do companies in other parts of the world.
  • More than a third of organisations cite the limited availability of internal resources to address fraud risk proactively as a challenge.
  • A significant percentage of large companies and North American-based organisations report not knowing how often the fraud risk assessment is conducted.
  • Organisations in Latin America/South America and Europe are far more likely to include members from different departments on the fraud risk assessment team than are companies in other regions, particularly North America.
  • The use of telephonic hotlines for employees to communicate concerns about accounting or auditing issues is far more prevalent in North America than in other regions.
  • Less than half of organisations conduct surprise audits at least annually.

 

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