Originally posted by SecTrainer
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First of all, the CFE Report to the Nation is not a scientifically random survey. As the survey says "The study is based on data compiled from 1,134 cases of occupational fraud that were investigated between January 2004 and January 2006. Information from each case was reported by a Certified Fraud Examiner who investigated the case." This is an important note because it indicates that the data can be skewed to reflect just the most extreme. While the data is always good, it is not the same as a random sampling, or a completely in-depth study.
Second, the report covers much more than just retail. As a result the numbers are much larger than what is faced in retail, ordinarily. I am familiar with the retail and restaurant industries, and know what they are generally doing for Loss Prevention. I cannot claim to understand other industries, such as banking, government, insurance, and manufacturing, are doing to thwart their losses. Are their efforts to reduce losses better or worse? Are they focused on apprehensions, audits, awareness? I don't know and can't say. The data may be extremely skewed as a result, and cannot be compared effectively to retail alone.
Third, SecTrainer did not accurately reflect the reasons for the discrepancies between small and large companies. According to the report, "One of the reasons small businesses suffer such high fraud losses is that they generally do a poor job of proactively detecting fraud. Less than 10% of small businesses had anonymous fraud reporting systems, and less than 20% had internal audit departments, conducted surprise audits, or conducted fraud training for their employees and managers."
While SecTrainer translated this into his own terms of "a failure to enforce basic controls", that is not what the report said. Notice the words PROACTIVELY detect fraud, which also means they were not PROACTIVELY preventing fraud. They did not teach employees to report fraud or provide a hotline for them to do so, and they did not provide FRAUD TRAINING for their managers. SecTrainer's own resource confirms what I have been saying. Training, education and awareness are the keys for PROACTIVELY reducing losses.
Once again, I am not saying investigations are not necessary. I am not saying that controls are not necessary. I am not saying that audits are not necessary. I am saying that all of that should be secondary to EDUCATION. Only when you place the priority of Loss Prevention on education can you truly prevent losses, and even SecTrainers own resource confirms this to be true.
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