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FEATURE: SECURITY
Fighting
FRAUD
Fraud can be extremely damaging for any business and in the current climate could
potentially bring a business to its knees. But some relatively simple steps can minimise
the risks
T
here are three stages to minimising fraud risk. First is to put right way. It is necessary both to preserve evidence and investigate
in place controls to try and prevent fraud occurring. Second the fraud. This usually happens covertly to avoid tipping off the
is to try and ensure that, if those systems break down, the fraudster, allowing him to either move the proceeds of fraud or
fraud is detected. Finally, once a fraud has been detected, it is destroy evidence.
vitally important to respond quickly and effectively, to maximise It is very difficult to react in this way without having a well thought
the possibility of recovering losses, or a successful prosecution, out fraud response plan, particularly, as is often the case, when the
depending on the focus of the business. fraud is not something of which the company has previous experience.
The first part of prevention is to identify your fraud risks. Without Such a plan would set out to whom fraud should be reported, and
doing so you cannot hope to put in place systems to prevent these how, in order to preserve secrecy. It should establish how and when
risks occurring. Common risks for retailers are both internal and the matter should be escalated and to whom. It should deal with who
external.
Internally the risks are from employees and can include theft
of goods, theft of money and in respect of more senior employees,
manipulation of figures in order to receive bonuses. The sort of
“An effective response invariably
controls which can prevent this behaviour include properly screening
people before they are employed, and proper management of
means acting quickly and in the
employees, which means managers getting to know exactly what it is
that employees actually do.
right way”
This is particularly the case with long standing trusted employees
whose role is a little unclear. Find out, or your business is at risk.
Other checks and balances can be established as necessary. One is to be in charge of the investigation, usually a very senior member
important thing to remember, however, is that the more random such of management, or, if the business is sufficiently big enough, internal
checks are, the more risk there is of a fraudster being caught and so auditors or investigation teams.
the less likely they are to commit fraud. It will be necessary for early decisions to be made as to the
External risks can be as trivial as a shoplifter acting alone and focus of the investigation – a criminal prosecution, civil recovery, or
stealing goods from the shop, to more audacious and organised both. External advisors should be identified, such as lawyers, forensic
criminals stealing goods and then returning them for refunds with the accountants or investigators, and the circumstances in which they
aid of forged receipts, having targeted inexperienced employees. Most should be contacted.
retailers have ways to minimise these risks, but above all, training your Whilst the threat of fraud is very real, and the consequences
staff in what to look out for can be invaluable. potentially damaging, by following these simple guidelines the impact
In respect of both internal and external threats the best way to can be minimised.
prevent and detect fraud is by educating your employees. Develop an
anti-fraud culture, and encourage whistleblowing, by putting in place a William Christopher is a partner in the Business Crime and
procedure by which reports can be made. This should be in confidence Commercial Fraud group at McGrigors LLP, based in the London office.
initially, although if evidence is required in court the witness will Contact him by email on william.christopher@mcgrigors.com
eventually have to go public.
Until this time, however, the procedure should set out how it is Find out more:
that the whistleblower’s anonymity is to be protected, whilst their For more information, please contact the author or visit the website:
allegations are investigated.

www.shopping-centre.co.uk/security
An effective response invariably means acting quickly and in the

graham.parker@jldmedia.com
SHOPPING CENTRE OCTOBER 2009 www.shopping-centre.co.uk
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