Fraud Risk Management
Fraud Risk Management (FRM) is imperative for addressing the rise of fraud-risk in the past 2-3 years. The government scrutiny as it relates to fraud-risk is rightfully growing
FRM
What is FRM?
Fraud Risk Management (FRM) is an ongoing effort required to identify and quantify the organization potential fraud-risk exposure across all verticals. The program aim is to reduce financial losses risk, reputation risk, and compliance exposure.
Why FRM is crucial?
Fraud risk management is more important than ever:
-
A disturbing rise in fraudulent activity first-party and third-party fraud
-
Fraud is rising in all verticals, ATO, NAF, checks, transfers, scams, etc.
-
Government agencies scrutiny is growing, and requires FIs to act accordingly
-
Fraud prevention is aligning more with Risk Office as part of risk governance
-
New technologies for analytics, measuring and reporting of risk can improve FRM
Strategic FRM
The steps
Building a strategy for fraud risk management should include:
-
Designated fraud-risk functions in the organization fraud operating model
-
Systematic and recurring fraud-risk assessments
-
Map and quantify existing risk vertical
-
Report fraud-risk systematically using well defined set of KRIs
-
Fraud-risk comities comprised of first line of defense, fraud operation, fraud analytics
What should you do?
To insure the effectiveness of your fraud risk management program, you should:
-
Hold a fraud risk assessment to map and quantify existing risk
-
Ensure your risk assessment findings are prioritized based severity, effectiveness, effort,
-
Align fraud risk findings with fraud technology and fraud program strategy
-
Develop a clear roadmap to mitigate risk from identified vulnerabilities
-
Ensure all fraud and risk stakeholders informed and are part the FRM program
Going beyond
To be a head of the curve, you should go beyond standard FRM programs:
-
Perform an objective fraud-risk assessment outside a systematic program process
-
Build a systematic reporting process for fraud-risk with KRIs/KPIs to stakeholders
-
Perform an industry vendor mapping and selection for vulnerabilities
-
Leverage automation to measure and report risk indicators consistently
Want to discuss FRM and hear how we can help? Lets talk!