Build Your Library
What fraud would earn your organization unwanted media attention? Who is the perpetrator and what is the fraud act that will create a headline you do not want to see?
Get your leaders in a room for an hour with a whiteboard, ask these questions, and you will end up with a list of two or three dozen frauds to get your library started. I like to start off heavy, with serious frauds, because they grab people's attention. Certainly we will address common process frauds such as cash theft or ghosts on the payroll, but we also want to make sure we are not turning a blind eye to the disasters.
If you ask these questions of executives and seasoned operations personnel, you will see the frauds will not just represent direct financial losses. One of my clients ended up on 60 Minutes due to a relatively simple $150 service, but because they deceived an elderly lady under hospice care, the nature of the fraud created a public relations disaster. Sometimes the financial impact of a fraud is irrelevant.
In the What Can Go Wrong lists under the Fraud Library, you can see I like to list both the perpetrator and fraud act, which allows me to tell a little story in a couple of sentences. Stories stick with people, and infuse life into the problems. Feel free to use these lists to jump start the conversation - select a common process or industry list that suits your environment.
To give you examples of what others have come up with, here is a list of some of the more interesting submissions from clients. These should give you a feel for the types of frauds organizations encounter on a high level.
Please keep in mind - this is a brainstorming exercise to raise awareness. Many of the examples I provide will seem far-fetched, and beyond the capacity for most people to anticipate and prepare for. However, they are instructive; this is what is going on out there, these things have happened. Let them fuel your own ideas for your organization's library.
When you have populated your library with executive concerns, look to the common process frauds in my library to fill out your list.
Caution: Do not attempt to assign probability and impact to the items in your library. People love to create heat maps that attempt to evaluate risk, and someone in the room will always say, "that would never happen here." People do not predict the future very well in general, and are particularly awful at assessing risk; people naturally underrate potential disasters as improbable, when in fact disasters are quite common. Not that you and your leadership need to develop paranoia about a comet strike; on the other hand, we do not want to overlook a potential problem because we believed it could not happen to us. Or because we miscalculated its impact, when we had no real basis for predicting the impact in the first place.
Once we are aware of what can go wrong in our organization, we can then begin to look for symptoms of the problems.