Financial Crime Risk Management.......
Has, your business considered the true costs of Financial Crime?
The underlying threat of financial crime is a risk of doing business. Individuals and organised crime groups have historically targeted financial institutions to obtain account information and funds by exploiting vulnerabilities through a variety of fraudulent schemes. Organised criminals have developed these schemes from traditional fraud scams, embracing the opportunities provided by multiple business channels, in particular online/Ecrime.
The value of customer information has been recognized by organized crime for many years with theft and or compromise of customer sensitive information increasing at an alarming rate. Your company may also be financially liable for losses incurred by a third party as a result of breaches of your data security which result in losses by other organizations. Numerous high profile incidents occur in ever increasing numbers, frequently resulting in the collapse of a business, including major corporates.
You may also find that failures in your systems and controls which have lead to criminally derived funds being transacted through your firm, could result in criminal prosecution and or regulatory sanctions on both the firm and individual employees including board members.
Financial Crime occurs from two sources, external and internal with growing incidents of collusion by both employees and organized crime, the most dangerous combination of all.
Impact of Financial Crime
For almost every kind of business, crime is a potential source of risk that could have a materially disruptive effect. Crime can have its effect on the business in a number of ways, which range from:
Catastrophic "Business Busting" single major hits. For example, arson or terrorist attacks causing the destruction or serious interruption of major business assets, or a major fraud where the transfer of many millions by a member of staff occurs.
Criminal Acts where individual occurrences have comparatively little impact on profitability, but where the cumulative effect of repeated occurrences can lead to business failure; and
Crime which may not damage the business directly but which can have a significant effect on the reputation of the business, particularly where customer sensitive data is compromised.
The Hidden Costs
Financial Crime and in particular fraud and or internal criminal activity often results in an actual loss to the victim. Additionally, hidden cost will arise following even an attempted attack/compromise.
These hidden costs include, but may not be limited to, recovery actions, investigation, external legal advice, eForensic/data compromise related investigations/review and associated security costs recruitment, re-training and the potential negative impact on operational delivery.
Individuals within the firm may be held accountable in instances where negligence is deemed to have occurred. There may also be physical risks to staff and their families. A further key risk is that associated with reputational damage.
Where we can help
Regardless of the nature of the attack, compromise or fraud scheme, firms face a significant problem and challenge in managing these threats as well as applying resources needed to counter the threat, this is where we can assist you to reduce the risk/probability of such attacks and to ensure that effective and compliant structures , security, processes, procedures, systems and controls are put in place.
The result of not addressing your potential Financial Crime Risk at a consistent and effective level is not only financial loss, but loss of your good reputation and trust within the marketplace, as well as the possibility violating specific criminal and or regulatory controls and thus invoking substantial criminal, civil and or regulatory penalties, which in themselves could even exceed the financial losses incurred.
The future, health, profitability and reputation of your firm are dependent, in part, on how well you manage the threat of Financial Crime Risk going forward.
Association of Certified Fraud Examiners
CFE - Certified Fraud Examiner
International Association of Financial Crimes Investigators
CFCI - Certified Financial Crimes Investigator