Fraud Risk Assessment

Topics: Management, Risk assessment, Risk Pages: 4 (1098 words) Published: March 17, 2013
| Fraud Risk Assessment|

| Fraud Risk Assessment|

Fraud risk assessment is a process intended at proactively identifying and addressing an organization’s vulnerabilities to internal and external fraud. The fraud risk assessment is more of an art than a science. Every organization is different therefore what gets evaluated and what is assessed depends on the organization. Fraud risk assessments are an ongoing, continuous process rather than just an activity. A fraud risk assessment first starts with the identification and prioritization of fraud risks that exist in the business. The process evolves as the results of identified risks and then begins to drive education, communication, organizational alignment, and action around effectively managing fraud risk and identifying new risk (Wells, 2010). Fraud risk assessments generally involve three key elements: 1. Identifying fraud risks inherent to the organization

2. Assessing the likelihood and significance of the fraud risk identified 3. Deciding on the appropriate responses to the identified risks (McNeal, 2009) The objective of a fraud risk assessment is to help an organization recognize what makes it most vulnerable to fraud. Through a fraud risk assessment, organizations are able to identify where fraud is most likely to occur, enabling proactive measures to be considered and implemented to reduce the chance that it could happen (Wells, 2010). There are seven reasons why an organization should conduct fraud risk assessments. Every organization should conduct a fraud risk assessment and build procedures to keep the process current and relevant. First, a fraud risk assessment is a great way for organizations to open up communication and raise awareness about fraud. Engaging employees in an open discussion about fraud can reduce the vulnerability of fraud within an organization. This tool is a reminder to employees that the organization does care about fraud and...
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