2020 forced many companies to make quick changes in sales, customer service, operations, and business management. Some businesses are still adjusting to these changes, while others are using this time to reset their strategy for emerging opportunities in a changing world. What about new risks? With cash reserves stretched, the looming threat of additional business changes, and an economy that’s struggling to regain its footing, risk exposure can’t be ignored.
Work venue changes
The workplace has been directly affected by the disruption of COVID-19. Leaders and staff have learned to work from home, trading commutes for makeshift home offices, virtual meetings, and remote technologies. Working from home poses added risks and exposure for businesses and their assets.
Even as many companies have ramped up operations, some employees may still be working from home without internal controls that specifically address the virtual workplace. Assessing these new risks and implementing safeguards should be a priority.
New processes, new risks
Outside fraud scams are a constant risk. Yet risks can also occur when the need to boost sales and the challenges of working from home combine in a way that weakens operational integrity. For example, eager to fulfill a new customer’s order, a salesperson operating outside of normal processes might skip credit references, increasing the chance of payment issues in the future. Or it may seem too challenging to obtain required approvals and signatures for a financial transaction, offering either a vendor or employee a window for theft during a time of financial stress.
Nobody likes to address the topic of fraud, but “loss prevention” programs can help confront the issue and guard your company against theft and other costly mistakes. Overall fraud is up by 25% since COVID-19 first struck.[i] Internal fraud is far more likely than outside theft to result in losses, and virtual workplaces present new opportunities — internal, external, intentional, and accidental — for fraud. The good news is that productivity tends to be strong amongst remote workers. Employees should see these new safeguards as a sign of your commitment to steer the business through this time of uncertainty with strength and confidence.
Remote work policies
Monitoring compliance with existing policies and procedures gets tougher when your staff members are working away from the office. Some policies need to be updated for virtual working environment. After all, what company already had a game plan in place that anticipated a pandemic with economic lockdowns? Now is the time to revise your policies and procedures with newly imagined scenarios. You may find templates online, or you can ask a similar company for permission to adapt theirs.
Virtual work is not going away. To adapt your policies and procedures, continue to zero in on areas of exposure:
- Payroll fraud: Require accounting for remote work hours and prior authorization of overtime.
- Invoice/payment fraud: Educate virtual employees on the increased risk of scams, especially with criminals posing as legitimate suppliers.
- Inventories: Count stock and equipment regularly to make it harder for employees to pilfer company assets.
- Cash management: Use digital signatures for approval of all transactions, closely monitor revenue and disbursements, and reconcile statements.
- Digital commerce: Verify all online transfers of money and invest in good e-commerce technology so employees aren’t privy to account and credit card numbers.
- Cyber-fraud: Secure networks with updated security software, firewalls, and password-protected technologies, and ask employees and vendors for proof of secure networks.
- Accidental loss: Require logging of waste and mishaps that might cost money and learn how to spot bookkeeping errors.
- New faces: Don’t skip important steps in onboarding new business partners or employees and discourage fraud by explaining your policies to prevent it.
Addressing the risks
Unfortunately, businesses may still be reluctant to talk about these risks with employees out of concern for the implied suspicion that goes with those discussions. Remember, loss prevention is grounded in trust and in creating an environment where your company’s values are followed at all work locations. Walk yourself through every facet of operations that’s recently changed to identify opportunities for fraud or other losses and ensure that there are sufficient checks and balances.
Additional ways to protect your business:
- As you adapt to meet new challenges, examine the changes to assess exposure to asset loss. Ask an attorney or accountant to identify strategies to minimize risk.
- Maintain separation of duties and financial controls. As you shift responsibilities, relook at how you separate financial processing and accounting functions. Ask your accounting firm to check that you have proper controls in place and avoid issues at audit time.
- Boost awareness of fraud and make sure staff members know how to spot and report potential fraud.
- Get professional advice on risk management and rethink your business and cyber insurance to make sure you are properly covered. McGriff can help you look at your business and its exposure.
Learn more about fraud and loss prevention.
Use these sources to pinpoint your risks and consider ways to address them.
- The Federal Trade Commission provides up-to-date information on the latest scams related to the COVID-19 pandemic.
- Report suspected or confirmed scams at the FBI Internet Crime Complaint Center. You can also email the IRS to report phishing scams at email@example.com.
- Find out how Business Online can safeguard against fraud and security threats.
- The more you know about fraud, the less likely you are to become a victim. Learn more at BB&T Privacy and Security Central and SunTrust Fraud and Security Center.
- Listen to our podcast about pandemic-related fraud and phishing. Benjamin Tuttle from our Cyber Security Awareness team shares valuable tips and advice about how to stay safe.
Rethink your risk, exposure, and coverage.
Talk to your Truist relationship manager about having McGriff’s business and cyber insurance professionals review your coverage and make sure it’s up to date to cover the most relevant risks.
1Fraud in the Wake of COVID-19: Benchmarking Report, Association for Certified Fraud Examiners, 2020.
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