Page 14 - Risk Management Bulletin Jan- Mar 2021

RMAI BULLETIN JANUARY TO MARCH 2021

Y No system is completely fraud proof, since many o The Internet is also a treasured, and gigantic,
impostors are able to evade control systems put research tool.
in place to stop them. However, greater care paid 2) Benchmarking
to some of the most common indicators which can Comparisons of one financial period with another;
provide early warning that something is not quite or the performance of one cost centre, or business
right and increase the likelihood that the impostor unit, with another; or of overall business
will be discovered.
performance with industry standards, can
Y Warning signs have been defined as organizational highlight anomalies worthy of further
indicators of fraud risk. investigation.
Y Warning Signs can be classified under four Risks: 3) Risk Management Process
1) Business risk To detect, analyze, evaluate, treat, monitor frauds.
2) Financial risk
4) Systems Analysis
3) Environmental risk It is significant to inspect the systems in place and
4) IT and Data risk identify any weaknesses that could be chances for
the impostor.
Fraud Indicators: Fraud Alerts 5) Specialist Software

Y Fraud alerts have been described as specific Such as audit tools for data identical analysis can
events or red flags, which may be indicative of substantiate very useful. Additional tools allow for
fraud. Some of these Red Flags are as follows: examination such as real time transaction
o Unidentified emails/letters/telephone calls. assessment, targeted post-transactional review, or

o Emails sent at uncommon times, with strategic investigation of management accounts.
needless attachments, or to unfamiliar end- 6) Exception Reporting
points. Many organizations can generate automatic
o Discrepancy between earnings and lifestyle. reports for results that fall outside of pre-arranged
o Supplies purchased in excess of need. threshold values (exceptions), allowinginstant
identification of results differing from the
o Higher than average number of failed login standard.
attempts.
D) Insurance Fraud Controls through Fraud
Tools & Techniques for Fraud Response:

Detection: Following fraud response steps helps an insurance
1) Background Reading company to control frauds
o To keep up to date with fraud inclinations and 1) Purpose:
matters.
The fraud response plan is an official means of setting
down clearly the measures which are in place for
dealing with detected or suspected cases of fraud.
It is planned to provide measures which allow for
evidence gathering and collation in a manner which
will simplify informed decision-making, while
safeguarding that evidence gathered will be
permissible in the event of any civil or criminal action.

2) Policy:
The fraud response plan should repeat the
organization's commitment to high legal, ethical and
moral standards in all its actions and its approach to

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