KPMG's Shirley Ivason-Wagener cautions against technology-enabled fraud

More sophisticated and data-driven processes within business operations come with increased online activity and agility on the part of employees, though consideration must be given to the fact that with this increased online activity is increased potential risk to the business –particularly the growing occurrence of technology-enabled fraud, cautions KPMG’s Shirley Ivason-Wagener, Partner and Country Leader, Fraud Risk Management and Ethics Advisory. There’s no denying that we live in a fast-paced digital era that is underpinned by this consumerism sense of instant gratification. As a result, companies are continually transforming their technology-driven business processes to maximise on efficiencies, as well as integrating different processes and systems and even enabling inter-company and global connectivity – aimed at remaining competitive. Today, technology is a significant enabler for fraudsters, where tech-savvy swindlers are using it in a variety of ways to perpetrate frauds. Cyber fraud continues to be identified as a growing threat to business.

However, cyber is not the only form of fraud that threatens businesses. In this regard it is surprising that there is limited, if not negligible, use of anti-fraud tools by companies and government entities in combatting fraud - a failing which leaves them vulnerable and exposed. Furthermore, not enough threat analysis is being done through data analytics in proactive fraud detection.

The majority of fraud continues to be due to weak technologically supported internal controls. Often, the fraudsters are ahead in finding creative ways to beat the system while companies and governments play catch-up in trying to prevent fraud after it has already occurred.

Plainly said, in today's online and digital world, fighting fraud without technology is a lot like "going to a gunfight with a knife" and expecting to win.

As the game changer, technology can be described as a "double-edged sword", where, despite its increasing use as an enabler, embedding technology as a key driver and enabler in fraud detection is critical to successfully managing fraud risk exposure.

Managing the risk of fraud requires a multidimensional approach underpinned by a concerted effort by business leadership to drive a top-down approach. This should then be visible and evident within the business by strengthening the control environment through robust anti-fraud controls, continuous technology-driven auditing and monitoring, management oversight and regular fraud risk assessments - as key first-line defences to minimising the opportunity for fraud.

Further to this, providing mechanisms for employees to report fraud without fear, conducting regular fraud and ethics awareness education, as well as communication on enforcement actions, are just as important to embedding an anti-fraud culture within the business.

Such activities are aimed at influencing employee ethical behaviour and ultimately reducing the rationale and motivation for employees themselves to commit fraud.

Globalisation and regulation are just a few of the megatrends for why controls are more important than ever in business. Fraud remains a global scourge that harms business and government reputations, costs millions and ruins lives. It is a heavy economic and moral burden on society. However, by profiling potential fraudsters and adopting more proactive strategies and the right technological tools, we can fight back!