Combating fraud risks in a competitive environment

India has witnessed a positive growth trajectory, becoming one of the fastest growing emerging economies in the world. The World Bank’s Ease of Doing Business Report 2018 also shows that the ranking is up by 30 places (100 from 130) and made it to the top 100 nations list. Additionally, the government and the regulatory authorities have also been taking initiatives by introducing new laws and amending the existing ones, such as the Insolvency and Bankruptcy Code, the cabinet approving promulgation of the Fugitive Economic Offenders Bill, 2018, etc. to fight corruption.

However, fraud, bribery and corruption continue to threaten businesses. Our Global Fraud Survey 2018 also highlighted similar views. Forty percent of Indian respondents stated that bribery and corruption are widespread in business, compared to 38% globally. Further, around 44% of Indian respondents said that at least one of the practices such as offering cash, entertainment, personal gifts and misstating financial performance is an acceptable norm for business survival. Thus, in this race to finish first, organizations are increasingly becoming vulnerable to risks.

While there is no guaranteed method to deter fraud, a well-structured framework, robust implementation, determined management and receptive individuals can support corporates in tackling fraud risks early on. Such efforts help empower an organization and imbibe a deep-rooted anti-bribery culture which can be far more effective compared to any policy or procedure laid down to reduce the incidences of fraud.

Some of the measures that organizations should empower to enable a better working environment include:

Educate employees/vendors/customers about good behavior:

Most organizations have policies and procedures only on paper but fail to implement them in practice. It is more of a tick-in-the-box exercise. The recent years have also seen a rise in cases of procurement fraud, leading to a rise in third-party fraud. Organizations can conduct training and awareness campaigns at regular intervals, while also conducting robust background checks on third-party vendors, both during on-boarding exercise and at fixed intervals to efficiently detect and curb fraudulent activities.

Monitor data/trends:

An organization’s epicenter is its data. Hence, it becomes imperative for them to place stringent processes for monitoring data. With the EU’s regulation on General Data Protection Regulation (GDPR), there is additional onus on corporates to ensure data privacy of individuals in organizations. Moreover, using latest tools and techniques such as forensic data analysis, robust process automation, interactive dashboards, etc. will also help uncover anomalies early on.

Patronize ethical behavior:

In recent times, though organizations are continuously striving to inculcate a more inclusive environment for its people, the pursuit of profit is still one of the major organizational goals. Employees will have to make a choice between:

  • Going the right way and choosing to lose some profit for the delayed start v/s paying bribes, getting quicker approvals and instantly becoming profitable
  • Explaining the reasons for downfall/losses to shareholders/investors v/s window dressing the books of accounts for a pat-on-the-back
  • Getting a better deal for the company v/s having a share in the pie by taking kickbacks

Orient people:

Employees are the face of any organization, which has both pros and cons. While on one hand, they are intellectual and rational beings who can be trained and encouraged to follow a certain set of principles, there are also, on the other hand, people who succumb to unethical behavior to climb the professional ladder. If the top management doesn’t effectively communicate its zero tolerance against such behavior, it can tarnish the most well set anti-fraud program of any organization.

Women inclusion in teams:

Gender diversity has been a topic of discussion for quite some time now. While the number of women on the boards of companies in India is rising steadily, there is still much to do in order to accelerate gender diversity. For a long time now, women have always been the better gender when it comes to rationalizing the consequences before acting. They are socialized to take fewer risks for any advantage and show greater concerns about equity and justice. Hence, it is the responsibility of the board members and/or shareholders to ensure a healthy diversity balance is maintained.

Eliminate non-transparency in business operations:

Over centuries, the human mind has developed in a way that the level of opaqueness or possibility to avoid the consequences of any malpractice is directly proportional to the level of such acts in the organization and vice-versa. An employee who is certain that no one in the organization would cross-check him forging the books is more likely to commit fraud. Bringing in transparency in business operations across verticals will act as a huge deterrent for people.


Organizations who claim to have the best-in-class governance model, often lay down an elaborate procedure and guideline for actions to be taken against an offender, in case of breach of ethics and the code of conduct. The employees in such organizations are able to overcome the temptation of personal gains from any unethical activity, which is against the interest of the company. The management needs to make sure that such employees are rewarded and recognized for their contribution to the organization. Corporates need to nurture such talent who is willing to fight the odds and stand strong against unethical practices.

With the above-laid procedures and efforts, an organization can look at imbibing a corporate culture that minimizes the incidences of fraud and corruption, and strives for rapid growth.