Grow Through Proactive Risk Management
Background Behavioral red flag is one of the fraud indicator in an organization. One needs to understand the significance of red flags and take appropriate action on time. As in […]
Behavioral red flag is one of the fraud indicator in an organization. One needs to understand the significance of red flags and take appropriate action on time.
As in the case of profit making organizations, risk management is equally important in nonprofit organizations. Occupational fraud causes huge losses to different countries every year.
It is almost unthinkable to you that your trusted employee that too at higher level and especially with your organization for longer time steal money. So, you need to be aware that occupational fraud and corruption is nowadays a great threat to your organization. This holds equally got not only in business, trading, financial institutions but also in NGOs, INGOs, government organizations.
Association of Certified Fraud Examiners (ACFE) conducted survey in 2018 about people with behavioral red flag. As per the survey report, private sectors were mostly affected by occupational fraud while not-for-profit sector also affected significantly by occupational fraud. Also, small, medium as well as large organizations were affected by occupational fraud
According to the study made by Ernst & Young (one of the leading global accounting firm) in 2018, 97% of the organizations think that they operate with integrity. However, study shows that people perceive fraud as a persistent global issue. According to the survey, 11% of the organizations globally experienced a significant fraud in the last two years whilst 38% of the respondents believed that bribery/corrupt practices happen widely in business in their country.
In every organization, you may come across several people with “red flag”. Although there could be numerous red flags, management may seriously focus over top red flags. Hence, focusing on top 5 red flags helps to address the issue.
Top five red flags identified by the ACFE include living beyond means, financial difficulties, close to vendors or customers, unwilling to share duties, and family problem. Please refer following picture:
Various research and studies reveal that organizations of any type and size are prone to fraud and corruption risk. Therefore, you need always to pay close attention to behaviors of people around you that could be red flags for fraud and corruption. Al last, you need to build/improve robust fraud risk management system to immunize your organization.
LD Mahat is a Chartered Accountant, Financial Adviser and Risk Management Specialist possessing over 29 years of diverse experience across several sectors covering a wide spectrum of assurance, business advisory and taxation disciplines. LD is a committed, highly motivated and result-oriented professional, consistently developing and nurturing client relationship and building long-lasting relationships with diverse clients. He has the ability to define issues, propose customized solutions that significantly add value and contribute to client’s success.
LD has got master’s in risk management form New York University, Stern Business School. He has undergone executive education at Harvard Business School and Insead Business School. He was risk management specialist in several Asian Development Bank Funded projects. He has provided risk management advisory services in various Nepalese corporate sectors.
LD has worked on large projects jointly with big 4 international accounting firms ~ PwC, Deloittee, Ernst & Young and KPMG in the field of Assurance, Diagnostic Review, Capacity Building, e-Government Procurement, e-Governance, Special Review, Investment Climate, and IFRS Implementation.
