Fraud is a term covering a multitude of offences, all of which are theft and all of which create a loss straight from your bottom line. An increasing number of companies and organisations are being victimised by either internal and external fraud, or collusion between the two.
Internal fraud offences by employees include such offences as false or inflated expense claims, payroll fraud, false employment applications, misappropriation of funds, forging signatures, falsifying documents and selling company assets at below their true value in return for payment.
Some of the highest value frauds have been carried out by company owners or senior employees, including cases where they fail to differentiate between company funds and their own, borrowing the former to finance lavish lifestyles or to speculate, and then finding they are unable to replace the money.
External fraud is increasingly undertaken by criminal networks and can include credit card and cheque fraud, charity fraud, Nigerian "4-1-9" Scams, Ponzi Schemes and electronic banking fraud. Fraud attempts are not limited to a single product-line or channel - criminals will strike at ATMs, branches, point-of-sale, over the internet or via a mobile phone leaving organisations' 'siloed' defenses open and vulnerable to attack across any channel.
The reality is, almost all fraud will be discovered eventually, either by designed audits, observation of lifestyle, complaints or sometimes by accident. However, the earlier the intervention, the greater the chance of detection and the lower the losses will be to the company.