California Business - Volume 3, Issue 1 - Northern California - 14

BUSINESS
INSIDER

CORPORATE FRAUD
How a few simple controls can make the difference in fraud prevention
"Fraudsters are always one
step ahead, devising new,
clever techniques to separate
companies from their money,"
- John Harrison, senior vice president,
California Bank & Trust

y far the most pervasive fraud risks to companies
are cybercrime and internal fraud.
Cybercrime takes many forms, from large
fraud operations such as credit card data
breaches to malware attacks that collect private information from company computers, including system
passwords. At the same time, a lack of internal controls
for protecting company assets and regularly reconciling
accounts can result in significant losses.
"The risk of corporate fraud, internal and external,
places companies in a precarious position," says John Harrison, a senior vice president at California Bank & Trust.
"They need to balance routine business flow and operations
with preventing and detecting fraud - particularly online
fraud exposure - that may result in operating losses. In
many cases, a few simple controls can make the difference
between a profitable year and a large financial loss."
A changing landscape
Billions of people have benefited from instantaneous access to information from anywhere, at any time. But these
advances have also aided criminals who use technology
to steal identities, credit card numbers and cash. Gone
are the days when people or companies were robbed in
person. It's more lucrative and easier for a cybercriminal
to steal from the comfort of a laptop.
To combat this, strong controls are required.
"Restrict online access on a need-to-use basis," says
Harrison. "Use dual authentication with online transactions
such as online transfers and outgoing wire transfers. Always
14 * California Business

employ strong online passwords and change them regularly. Utilize secure entry tokens for all users who perform
administration functions or process online payments."
You also need to beware of customer emails requesting
a change to wire destination instructions, as hackers can
compromise email passwords through malware attacks
and social engineering. If in doubt, call the customer
to confirm any out-of-the-ordinary payment requests or
change to a payment destination.
Just because criminals have turned increasingly to
online operations, don't forget tried-and-true controls to
protect against more traditional forms of fraud.
"Access to blank check stock must be monitored,"
says Harrison. "Simple dual accounting controls, such as
ensuring staff responsible for fulfilling customer orders
are different than employees reconciling order invoice
payments, reduces fraud opportunities. Whenever possible, reconcile accounts daily - easily available through
online banking - but always at least monthly, and report
discrepancies immediately."
The most important defense in fraud might be common sense.
"Fraudsters are always one step ahead, devising new,
clever techniques to separate companies from their
money," says Harrison. "The old saying, 'If a deal sounds
too good to be true, it probably is,' is still true. A business
offer from an unknown person via email promising a large
profit for a quick transaction is a huge red flag. Educated
people fall prey to fraud all the time. Due diligence, prudent internal controls and common sense are the keys to
preventing losses." *
John Harrison is a senior vice president for California
Bank & Trust. Contact him at (858) 514-2518 or
john.harrison@calbt.com.

California Business - Volume 3, Issue 1 - Northern California

Table of Contents for the Digital Edition of California Business - Volume 3, Issue 1 - Northern California