Home > business basics, Business Fraud, fraud prevention, who we are as a nation > The Perfect Storm of Fraud in Business

The Perfect Storm of Fraud in Business


The basics are means, motivation & justification.

We have looked at this before but obviously we need to break it down more and in simpler terms.

Means = opportunity, if you as a business owner allow for 1 person or maybe 2 persons to control your business income you are creating the opportunity.

I know as being a small business owner there are never enough hours in the day to complete every task needed BUT if you not accountable who is?

Motivation = need, do any persons you employ have needs or fears in their lives? Perhaps a little extra money would help their situation, this is the second piece of a frauds’ perfect storm.

Justification = rationalization, can any employee justify they are worth more than you are paying them? Or perhaps they can justify is by saying it’s a loan, or they have a better use for the money, at least in their own minds.

I understand small family businesses, you have to trust the employee’s you have working for you, BUT you have to still be diligent regarding what you and your business do and how your employee’s take care of business in your name.

Part of this is being an honorable business person, the spoils of business are very inviting, BUT if your driving a Porsche and your employees can barely afford a used Honda, you really need to look at who you are and what this says about you personally to your employees.

Most business owners treat their employees with respect and true trust, often times the trust and respect is due, occasionally you respect and trust someone and they don’t deserve it may have in the past they were the best employee, helping to grow your business, but due to the perfect storm described above they are not the same person they used to be, they have transformed without your realization of this fact.

As this economy continues to spiral most people need to tighten their belts, but with our society so beholden to the “good life” and the credit explosion this life has become dependant on may help to create “need” for a perfect Storm.

The result is a tightening of the belt may not work for your trusted employee, and after all they’ve given so much to your company.

Can you see where this ends?

You now have a frauds’ Perfect Storm, right there in our business.

So what do you do?

First, you need to look at ways of taking the opportunity out of the equation, if there is little to no opportunity, and your employees know this you will close one door of the Perfect Storm.

Second, you need to know what is going on with your employee’s, if they are looking for more overtime, or needing a raise, this could be a red flag that there may be trouble brewing.

No business can prevent 100% of potential fraud, but by taking simple steps you can secure the areas under your control, and take chance out of the Storm for the most part, remember the famous last words “It can’t happen to me or my business” for those of you saying that, I urge you to look up Murphy’s Law, anything that can go wrong, will. This too can happen to you.

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