From PYMNTS.com, “While most corporations are hesitant to admit it, fraud initiated by a company’s own employees is quite common — and incredibly expensive. Research earlier this year found corporate fraud to be at record-high levels. Estimates from the Association for Financial Professionals (AFP) found that more than a third of fraud attacks on the enterprise came from within the organization itself.
The type of fraud an employee may deploy varies greatly, from a seemingly benign inflation of figures on expense reports, to misuse of corporate cards or even the sale of company information and passwords.
Though difficult to detect, internal fraud has a massive impact on the bottom line. A report from Statistic Brain published in September calculated employee theft amounts to $50 billion every year, with 75 percent of employees surveyed admitting they have already stolen from their employer at least once.
According to the Anti-Fraud Collaboration, there are a few key factors that discourage employees from speaking up: a lack of confidence that upper management will back them up, the presence of intimidating personalities on the workforce, general mistrust in the workforce, “excessive” team loyalty, a lack of sound internal policies and procedures and a perception that even if misconduct is reported, the issue will not be addressed.
Employees fear retaliation by coworkers, and even termination, if they report suspected fraud, the report added.
“One of the most effective things boards of directors can do to promote a healthy working environment is to step up their oversight of company culture,” said NACD President and CEO Peter Gleason. “That begins with encouraging management to define its unique culture and communicate it properly to all levels of an organization.””