Battling Fraud Misconceptions

Jul 7, 2023

What's happening Fraud Fighters?


Imagine being the sole fraud fighter in a company. You would feel quite alone, and it would seem that others don't understand your role.


You're trapped in a continuous cycle of frustration, constantly correcting misunderstandings and trying to find support that seemed nonexistent. In a world full of busy leaders, the role of fraud often gets lost in translation.


It seems like each leader has a different perception of what fraud is. But how do we change that?


Let's investigate further.


Read Time: ~4.44 Minutes


Grappling with Isolation


I sat down at my desk after being scolded for not working at my desk.


I was the sole member of a fraud prevention team, a one-man army trying to fight fraud. Leadership saw me as someone who should be glued to a desk. I had a unique style of work, often finding open spots in the building to create new dynamics and perspectives in my working environment.


This kept me sharp and creative, but it was a concept that was hard for others to grasp.


I was grappling with a sense of isolation. The feeling of shouting into a void, of not being heard, was overwhelming. The lack of understanding from leadership about my role led to consistent frustration.


I was struggling.


The lack of budget, the absence of engineering support, and the dwindling influence with leadership were all clear signs of an uphill battle. I was stuck as a one-man fraud team.


I couldn't get the support I needed - physical, financial, nor technical. It was clear they had no idea what I did or how I did it, and it seemed like they didn't care to understand.


We didn’t have a misunderstanding. We needed to reframe the entire perception of fraud.


My Battle with Misconceptions


Misconceptions often cloud the understanding of various roles and functions. One area that frequently falls prey to misunderstanding is our world of fraud management. As a Fraud Leader, I wanted to uncover these misconceptions within my organization, aiming to shed light on the true value and strategic importance of fighting fraud.


Misconception 1: Fraud is a Cost of Doing Business

Fraud is inevitable and just a cost of doing business. We know that many instances of fraud can be prevented with the right controls. Believing this misconception can lead to complacency, potentially increasing the organization's vulnerability to fraud.


Misconception 2: Small Fraud Doesn't Matter

Small fraud aren't worth the time and resources to investigate. We understand that small fraud can be indicative of larger issues and can also add up over time to represent significant losses. Ignoring this misconception can lead to where fraud is overlooked, leading to larger issues down the line.


Misconception 3: Fraud Management is a Standalone Function

Fraud management operates independently of other business functions. In reality, we need to collaborate closely with various departments, such as finance, operations, and engineering, to implement effective fraud prevention strategies. This misconception can lead to a lack of integration and communication between departments, creating the dreaded silos.


Misconception 4: Technology Alone Can Solve Fraud

While technology plays a crucial role in detecting and preventing fraud, it's not a silver bullet. Effective fraud management requires a combination of technology, well-designed processes, and the fraud fighter’s brain. Believing this misconception can lead to over-reliance on technology and neglect of other important aspects of fraud management.


Identifying Misconceptions


Where do you even begin identifying if there are key misconceptions? Most probably won’t feel confident enough to bring up the conversation directly with leadership.


(spoiler: you should. we’re all adults. Consider discussing them with leadership directly to ensure everyone has a clear and accurate understanding of your team's role.)


If you're looking to assess leadership's understanding of your team's role without direct interaction, you'll need to rely on indirect methods. Here are some strategies:


Review Existing Communications

Look at emails, meeting minutes, and other communications from leadership that mention your team or your team's work. Do they accurately represent what your team does? Misunderstandings or inaccuracies could indicate a misconception.


Observe Decisions and Actions

How leadership makes decisions or acts in relation to your team can also reveal their understanding. For example, if they frequently bypass your team on projects where you should be involved, they may not fully understand your team's role.


Feedback from Other Teams

Other teams that interact with both your team and leadership can provide valuable insights. Without breaching confidentiality, you can gauge their perception of how leadership views your team.


Performance Reviews 

If your team's performance reviews include feedback from leadership, this can give you an idea of their understanding of your team's role.


Remember, these methods can provide clues, but they may not give you a complete picture.


Misconception Mistakes to Avoid


In the journey of reframing the perception of fraud management, it's crucial to be aware of potential pitfalls. These are the top three common mistakes that organizations often make, and understanding them is the first step towards prevention. Each mistake carries with it a lesson, a roadmap to better practices, and a guide to strategic decision-making


Ignoring Misconceptions

One of the biggest mistakes is ignoring misconceptions, hoping they will correct themselves over time. Misconceptions can persist and even spread if not addressed, leading to misunderstandings about our role. To avoid this, we should proactively identify and address misconceptions through education and communication.


Overcomplicating the Message

When trying to address misconceptions, we may overcomplicate their message with technical jargon or complex explanations. This can confuse people and even reinforce misconceptions. To avoid this, We should strive to communicate in a clear, simple, and relatable manner (KYS, KYA, KYM). Simplify complex topics to make people care.


Not Engaging with Employees

Another common mistake is not engaging with employees when addressing misconceptions. This can lead to a one-way communication flow and may limit the effectiveness of the message. We should build in a feedback loop and involve employees in the process. This can help ensure that the message is understood and that misconceptions are effectively addressed.


Reframing Leadership’s Perspective


In many organizations, fraud is often misunderstood or undervalued. It's seen as a cost center, a necessary evil, or even a roadblock to business operations.


The negative impact of not reframing the perception of fraud management can be significant. Without support, fraud teams can struggle to keep up with evolving fraud risks, leading to financial losses, reputational damage, and regulatory penalties - but you know that struggle.


Reframing the perception of fraud management is crucial.


When fraud management is seen as a strategic partner, we get the support and resources we need to effectively protect our organization. We can contribute to broader business objectives, such as improving customer trust and operational efficiency.


Let’s break it down simply. How can you you use this framework today?


Understand the current perceptionIdentify the desired perceptionIdentify barriers to changeDevelop strategies to overcome barriersPut your strategies into actionMonitor and adjust


Change takes time, especially when it involves shifting perceptions. Expecting immediate change can lead to frustration and could potentially derail your efforts.


If an organization communicates the importance of fraud management but doesn't follow through with actions (like training, resource allocation, engineering), it can lead to skepticism and resistance among the rest of employees.


Avoid this at all costs.


Ensure that your actions align with your messaging. Consistency is key in successfully reframing perceptions.


Learn. Build. Prove.


See you again next Friday in your inbox.

​Brian

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