Page 15 - Risk Management Bulletin Jan- Mar 2021

RMAI BULLETIN JANUARY TO MARCH 2021

dealing with those who fail to meet those standards. 1) Reason behind a fraud need to be understood
It is important that all those working in the properly before taking proper fraud mitigations.
organization are aware of the risk of fraud and other
illegal acts, such as dishonesty or damage to property. 2) Cost is not a major factor in controlling frauds.
Organizations should be clear about the means of 3) Developing a sound ethical culture plays a very
enforcing the rules or controls which the organization vital role for fraud prevention in an organization.
has in place to counter such risks and be aware of how 4) Organization should work in having sound Internal
to report any suspicions they may have. Control systems to prevent Frauds.

3) Roles and Responsibilities: 5) Fraud Detection Mechanisms should be Robust.
Indicators and Warnings should be properly
The division of responsibilities for fraud risk
management will vary from one organization to the analyzed with the help of Fraud Detection Tools
next, depending on the size, industry, culture and & Techniques.
other factors. 6) Fraud Response System has to be clearly
However, the same should be documented and should documented and timely acted upon.
made available public in the company.
7) Insurers are responsible for Policyholders' Money,
so any leakage in the system through frauds can
4) The Response:
question the existence of an insurer.
Realistic steps for reacting to detected or suspected
instances of fraud include: 8) Regulators has clearly earmarked the guidelines to
Y Clear reporting mechanisms have sound Fraud Control system in place. So, it's
not the choice to have fraud control system or not
Y A thorough investigation
for an insurance company.
Y Punishing of the persons responsible (internal, civil
and/or criminal) 9) Utility of Investing in Fraud Control measures far
exceeds in benefits than Cost.
Y Recovery of stolen funds or property
Y Alteration of the anti-fraud strategy to avert 10) Cost is not the only investment for fraud control
similar conduct in the future measures. The other investments are making
sound ethical culture for the organization,
5) The Investigation: commitment & time of top management,
Preservation of evidence: It is vitally important that importance given to fraud awareness sessions,
control is taken of any physical evidence before the trainings etc.
opportunity arises for it to be removed or destroyed
by the suspect(s). Physical evidence may therefore References:
need to be seized at an early stage in the investigation, 1) Fraud Monitoring Framework; www.irdai.gov.in
before any witness statements are collected or 2) IRDAI Corporate Governance; www.irdai.gov.in
interviews conducted.
3) Guidelines on Corporate Governance for Central
Other Aspects- Physical & electronic evidence, Public Sector Enterprises (CPSE's) issued by
interviews, statements from witnesses, Statements Department of Public Enterprises (DPE);
from suspects. www.dpe.gov.in
4) Tommie W. Singleton's Research Works;
Conclusion: www.researchgate.net

With the detail study on all aspects of frauds, reason 5) "Fraud Triangle", by sociologist Donald Cressey;
behind frauds, causes of frauds, frauds at different www.acfe.com
stages of the life cycle of a proposal, frauds controls
at different levels with or without cost interventions, 6) Fraud Examination 6th Edition by W. Steve
fraud prevention, fraud detection and fraud response Albrecht
we can conclude below points: 7) Corporate Frauds; www.cimaglobal.com

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