Firms typically focus on improving their fraud prevention and detection measures to mitigate risk and reduce financial losses. But what is fraud prevention, and how does it differ from fraud detection? Are the two functions completely separate? Most importantly, what can a firm do to prevent fraud effectively? In this article, we answer these questions – going deeper to explore best practices firms should observe for sound fraud prevention.
What is Fraud Prevention?
Fraud prevention refers to a firm’s policies, functions, and processes that keep fraud from occurring. No fraud prevention strategy is foolproof, but firms can focus on preventing the types of fraud they’re most at risk for. This will ensure they use their resources most effectively. To do this well, they can implement regular risk assessments to ensure their framework is based on realistic risks.
The Difference Between Fraud Prevention and Detection
Fraud prevention and detection are complementary strategies to reduce fraudulent activity and losses. With fraud prevention, firms implement policies and safeguards that make it harder for criminals to commit fraud. Examples include:
- Employee and customer…
