Avoiding bias in your fraud risk management program

Complex business environments require fraud examiners to have diverse skills and holistic points of view to properly address the plethora of business risks. Escape your biases. Consider multiple sets of guidance to stay apprised to increase business transparency and dismantle silos of information.

The ACFE Fraud Tree divides fraud into three major categories: financial misstatement, corruption and asset misappropriation. Yet, sometimes, legal, compliance, audit and investigative professionals take narrower views of fraud risks based on their educational and professional experiences. It’s no surprise that people lean toward areas with which they’re most familiar. To demonstrate, try this experiment at work. Ask an in-house attorney to describe your organization’s top fraud risks. You’ll likely get an answer that leans toward bribery and corruption. Ask an external auditor the same question, and they’ll probably say something related to financial statement fraud. An internal auditor: some category of asset misappropriation or internal control weakness. Cybersecurity professional: a breach, data exfiltration or ransomware scheme. You get the idea.

As CFEs, we need to rise above professional biases and recognize all these areas have potential fraud risks.

Consider the CFE Exam you completed. The core components have remained the same: accounting, law, investigations and criminology. We can never forget to combine these disciplines to properly address fraud risk holistically. An effective fraud risk assessment always brings together multiple professionals with diverse disciplines to address occupational fraud via research, facilitated sessions, data analytics, web-based surveys and other means.