CONTROL OF FINANCIAL FRAUD RISKS

Risk treatment is also called risk control and it involves the choice and execution of activities meant
to minimize the chances of risk.

Control of Financial Risks - Fraud

Fraud is identified to be one of the major areas of financial risk. Fraud could be committed by the
staff, consumers, or suppliers of the organization. Likewise, fraud could happen due to false reporting
of its activities by the organization itself.

When there is a purpose for committing fraud or when the organization possesses assets that are
worth appropriating or when there is an opportunity to commit theft or fraud and or when there is a
lack of effective control an organization can face events of fraud. While there are apprehensions
about fraud, the actions are taken to resolve them have to include those that can prevent theft. These
will involve the installation of security fences and gates, the appointment of security guards,
enhanced lighting, and safe access to buildings.

Once the fraud controls are implemented, an organization has to study the degree of effectiveness of
such control measures. This includes internal audits. This examination should look for monetary or
material losses and assess areas where controls are lacking. The investigation should be proactive,
with a focus on vulnerable assets, and also indicate who could be accountable, how fraud might be
committed, and also the effectiveness of existing measures.

Control of Infrastructure Risks

Health and Safety at Work

Health and safety at work are one of the primary areas of worry for enterprises when it comes to
infrastructure hazards. This is a highly regulated subject that should be of top priority for all
businesses. Although it is generally managed as a separate function, this is a well-established
discipline within risk management. An organization's health and safety risks include being prosecuted
by a regulatory authority, litigated by an injured employee, and disrupted by accidents and risky
occurrences. Many health and safety methods and approaches are used in risk management
operations, and undoubtedly the cooperation from the health and safety experts is essential for
effective implementation of the risk management task.

Identification of the hazard, identification of who could be affected by the hazard, and consideration of

© 2023 Athena Global Education. All Rights Reserved

how serious an injury would be if it occurred are all features of a risk assessment.

The risk assessment should also contain information on the controls and measures currently being
adopted, as well as information on any additional actions that are required. The sole aim of a risk
assessment is to ensure that controls are satisfactory and that individuals are not being put in an
unreasonably dangerous situation.

Property Fire Protection

Fire is one of the principal causes of loss and disruption in the industrial, warehousing, leisure, and
retail industries. More than half of all businesses that experience a major fire do not fully recover from
the disaster. Manufacturing, transportation/distribution, retail, and, in particular, residential,
hospitality, and leisure occupancies are all susceptible to fire. Arson assaults are also strongly linked
to the level of building security that is currently maintained in the organization, i.e., when security is
beefed up, arson attacks are likely to be less.

When developing a fire risk strategy, the company must assess the fire hazards in connection to the
most common causes of workplace fires.

In developing fire risk security, the company must assess the fire hazards in connection to the most
common causes of fire in workplaces.

IT Security

The Information Technology (IT) infrastructure is one of the most important dependencies for
most businesses. For many businesses, the failure of a computer system can be extremely disruptive.

Information technology infrastructure is one of the most well-known examples of Disaster

Recovery Planning (DRP).

Loss of important data stored in the computer could be of serious concern for an organization and it is
most probable through hardware defaults rather than a software malfunction, power failure, or a
human error.

An IT policy needs to be established by businesses to ensure that data is used correctly and that the
company's IT infrastructure is protected. Directions relating to who is responsible for IT systems,
backup methods, anti-virus and spyware procedures, personal data use, use of the internet for
personal purposes, and personal e-mail limits should all be included in the policy.

Organizations that rely heavily on their IT infrastructure should have a robust disaster recovery plan.
In many cases, this will include provisions for an emergency duplicate backup computer facility, either
in the form of a mobile trailer driven to the organization's present location or a different location.

The backup facilities set up for emergencies could be anywhere from a comprehensive duplicate
facility with completely up-to-date data (called hot start facility) to the provision of a different
computer system that is completely devoid of any data (called cold start facility). Warm start facilities
are used to indicate a variety of backup systems that combine these two methodologies.

© 2023 Athena Global Education. All Rights Reserved

HR Risks

An association with employees, contractors, and volunteers is inevitable for an organization. As a

result, irrespective of the size, nature, or range of operations conducted by the organization, there will
always be human resources risks associated with its operation.

Control of Reputational Risks

Brand

A company's brand name is one of its most precious assets, and it's critical to protect it and any of its
brands at any cost. The use of well-known brands to offer goods or services with no evident
connection to the brand has been very popular among organizations, of late. Supermarkets, for
instance, now sell insurance and other financial products in addition to selling gasoline from forecourt
garages. For many firms, extending or expanding the brand in this way represents a significant
opportunity, but brand extensions must be suitable, believable, and successful.

Most businesses understand the importance of brands and have been prepared with procedures to
recognize brand extension opportunities. However, in many large firms, trademark ownership is not
always clearly established. Only when there is defined accountability within the company for
managing the brand can it be successfully used to expand into new product categories and business
sectors.

A new tendency has been to allow branded concessions to be developed within other organizations, in
addition to brand extensions. High-profile catering firms are increasingly running restaurant and café
operations in large department stores. This pattern has emerged in tandem with the rise of high-
profile sponsorship arrangements.

Environment

Global warming and its impact on organizations are one of the grave concerns relating to businesses.

© 2023 Athena Global Education. All Rights Reserved

Environmental issues could be anything from contamination of land or water bodies, massive
industrial wastes pushed into land and water bodies to the interests of organizations to go green.

Waste disposal is a major challenge for all businesses. The law for businesses creating industrial trash
is highly precise in terms of how the waste must be processed and how it must be disposed of. There
are still matters of concern for commercial firms that do not produce industrial waste or by-products.
Commercial trash disposal can be costly; thus, most countries require or at the very least encourage a
high level of recycling.

The issues relating to organizations are thereby associated with reducing the quantity of industrial
waste and adoption of go green policies. Because of the increased monitoring of public entities'
performance, many organizations in the public sector have specific recycling arrangements and
recycling targets.

Procurement of supplies or raw materials that have a lower environmental impact and are easier to
recycle will be among the options considered. Other options with the organizations are to execute
recycling policies laid and do necessary arrangements for the gathering of the recyclable waste. For
certain companies, there is also room to look at travel arrangements and urge staff to use public
transportation where possible, as well as reduce the frequency of travel they do. Organizations should
conduct an annual evaluation of cases where fraud has been found, in addition to assessing the
effectiveness of current safeguards. The audit committee should be given these reports.

To prevent fraud, a business concern has to implement a corporate fraud policy that details about
thoach of the concern towards fraud, the measures taken to control and investigate, and the
resources assigned for detecting fraud. Whistle-blowing procedures and a policy for dealing with those
suspected of fraud should be defined as well.

Risk control measures to detect, minimize and control fraud can be further subdivided as preventive,
corrective, directive, and d, detective. The measures stated below could be adopted by
organizations to minimize fraud:

Improve the process of recruitment

Minimize the intentions relating to fraud
Minimize the number of assets that are likely to be stolen
Reduce the scope for the assets to be stolen
Level of supervision to be enhanced
Increase the level of financial controls and management systems
Improve fraud detection measures
Improve record keeping (Source-Fundamental of Risk Management by Paul Hopkin-270-275)

Control of Marketplace Risks -Technology Developments

To keep up with the anticipations and desires of the customers is one of the biggest challenges faced
by organizations. This difficulty is exacerbated by technological advancements. Organizations that
provide technology-based consumer goods have a constant problem that can be turned into a
constant set of opportunities. In recent years, there have been significant advancements in the
technology utilized to provide home and mobile communications and entertainment. CDs were the
primary source of home and mobile entertainment until recently. The emergence of MP3 technology
forced organizations in this field to make judgments on which technology to pursue. The financial

© 2023 Athena Global Education. All Rights Reserved

commitment required to replace technologies was substantial, and the market dangers were equally
so. The rewards have proven to be huge for the organizations that correctly identified (and impacted)
the advances. Technology advantages can be of great help in a quickly changing business, but the
problem of precisely selecting the most likely effective technology is always present, and the
investment required is enormous.

Convenience, quality, affordability, and fashion; all influence consumer decisions on new technology.
Yet another element influencing consumer decisions and the availability of new technology is the fact
that substantial technological advancements take place all over the world. As a result, only a small
number of companies have the financial means to do the necessary research to manufacture
products based on the new technologies. These are also the same companies that create,
manufacture, and distribute new technology-based products.

For the pTo reapfits of such advanced technologies, most of the companies get into joint ventures,
share their expertise, and divide the expense of creating the new technologies. It can be tough to
choose joint-venture partners, and making the right decisions is crucial.

Competitors may try to agree on the technology that will be used while developing a new
entertainment technology that will be released over the world. This strategic strategy has the benefit
of sharing research costs and avoiding technology wars. The downside is that the potential for a
significant future competitive advantage is diminished.

© 2023 Athena Global Education. All Rights Reserved