Fraud a Top Concern for Compliance Leaders

Compliance professionals didn’t have it easy in 2018; significant regulations spanned industries globally – touching finance, trade and data in a big way. Among the related challenges of this business environment, the risk of fraud remains near the top of the list for many companies, a majority of whom have seen incidences of fraud negatively impact their business. Detection methods to combat fraud evolve over time, but so, too, do the fraudsters, turning the situation into a never-ending game of cat and mouse.

A majority (72 percent) of respondents to the second Dun & Bradstreet Compliance and Procurement Sentiment Report say fraud has had an impact on their company’s brand. In an effort to uncover the top issues and concerns among both compliance and procurement professionals, Dun & Bradstreet surveyed more than 600 professionals from the U.S. and U.K., delving into a range of questions about their roles, as well as their impressions of the industry overall. With this second report, we were able to measure changes in overall sentiment compared with the benchmark conducted earlier last year, and we dove deeper into fraud concerns and the use of technology.

Those surveyed reported fewer incidents of fraud as compared with the first survey published in June 2018 (see chart below), but many issues remain. Based on anecdotal conversations I’ve had with compliance and procurement professionals, some of the short-term improvements might be attributed to more internal training or better overall detection methods.

Reports of Fraud

We asked respondents the role in which policy and technology may have contributed to the fraud their organizations had experienced. Many cited organizational policies that were not properly implemented due to a lack of understanding, or a lack of related training. As for technology, 24 percent of respondents identified issues around either automation and data population or failure of their monitoring tools to detect changes in entity status. Both of these issues may have left organizations at a greater risk for fraud.

Overall, technology is viewed as an enabler for compliance teams, despite its identified shortcomings and challenges. In the initial survey, 36 percent of respondents called technology one of the barriers to their performance, but more recently, a majority of respondents cited technology as an enabler. A total of 88 percent said technology enables process management, and 86 percent said it helps with data management.

A successful compliance program requires a risk-based approach to collecting information and utilizing technology, and it needs to be fine-tuned within each organization. Of course, it’s a delicate balance: monitoring suspicious activity should be based on well-communicated processes and setting filters appropriately to catch fraudsters, yet not so stringent that it results in an abundance of alerts and false positives that could overwhelm compliance staff. Technology solutions need to be the key driver for compliance professionals in the evolving fight against fraud. Along with improved processes and data management, these critical capabilities are at the heart of maintaining control and combating bad actors.