Fraud: When public, customer and community service loses out to self service

When crises unfold, poorly planned and untested response operations will stress any organisation. Fraud, corruption and malfeasance can be substantial risks during times of disruption.

While fraud losses have greatest impact on smaller organisations (often threatening existential risks to finances or reputation), even companies with mature identification and investigation capabilities are not immune.

Some of the worst examples have occurred most brazenly within the top tiers of large, established organisations. According to the Report to the Nations on Occupational Fraud and Abuse – 2016 Global Fraud Study, the typical organisation loses 5% of revenues in a given year as a result of fraud. And when owners or executives commit fraud the median damage increases tenfold.

Increasingly not-for-profit organisations have been place under the corruption spotlight. Risk amongst these organisations is higher partly due to less stringent reporting rules, lower accountability, and limited controls and oversight (especially in developing countries).

Which brings us to the recent Red Cross admission, “that millions of dollars meant for fighting the deadly outbreak of Ebola in west Africa were siphoned off by its own staff.”

It’s an example of untested channels and systems being built and operated with little planning and almost no testing. And while the Red Cross has “committed to holding all those involved in any form of fraud to account”, it’s too little too late. How many lives could have been saved if that money had gone where it needed to go?

Closer to our home, incidents of fraud in NSW have increased steadily since comparable records began in 1995. And all three levels of Australian government have experienced fraud or corruption within their own ranks over the last few years.

As corruption is demonstrably increasing across Australian businesses and governments (and can even happen to the Red Cross!), organisations without a plan for reducing corruption risk during times of crisis are simply asking for trouble.

While the specifics of the Ebola outbreak could not have been predicted, a massive scale crisis in western Africa could have reasonably been envisaged. Responsible planning for the immediate roll out of new operational channels and systems should remain ongoing for all organisations. Crucially, training and drilling these plans regularly reduces the likelihood of corruption during an emergency or crisis response.

Tigertail can help your organisation with crisis planning and training, including systems of communication, accountability and reliability.