Companies currently have difficulties managing environmental hazards on both the internal and

external levels. The possibility of internal and external fraud persists as a severe and expensive
problem, despite the fact that no firm likes the concept of dishonest individuals cheating them.

According to the 2020 Global Fraud Study by the Association of Certified Fraud Examiners
(ACFE), businesses lose 5% of their yearly revenue on average to fraud. More troublingly, close
to one-third of all fraud cases globally involve a lack of internal controls to prevent fraud.

Thankfully, identifying fraud risks and reducing them need not be difficult. Businesses are able
to appreciate the whole spectrum of potential hazards thanks to a fraud risk assessment.

According to the Journal of Accountancy, fraud is frequently undertaken out of either need or
greed. When three factors come into play—opportunity, opportunity, and justification—fraud
may be committed. Financial need, the ability to carry out a fraud scheme, and personal
justification for unethical action are all reasons why bad actors commit fraud.

A proactive approach to addressing a company's vulnerabilities to internal and external fraud is

taken via a fraud risk assessment. While external frauds include hacking and the theft of personal
information, internal frauds include asset abuse and embezzlement. By industry, fraud falls into
many categories.

Internal control weaknesses usually result in criminals committing fraud. When used to
understand these gaps and the risk environment, a fraud risk assessment may help management
create a comprehensive risk management plan.