(By Jack Bigelow) Many human-made disasters (including fraud) on this planet can be traced back to some form of thinking at a critical decision point that goes something like this: “I’m good. My risks are low. I’m going to go for it.” But this misplaced confidence could be eclipsing a residual anxiety in the unconscious state of mind of many an executive. Neuroscientist Tali Sharot remarked, “We are more optimistic than realistic; but we are oblivious to the fact.”
We want profit and growth, yet many a company from Enron to Theranos to FTX planted the malevolent seeds of fraud during their good days. (And blissfully assumed that they were not vulnerable.) So, could you be at risk? Could you? Especially in thinking about fraud?
Oh, to be able to gather statistics on how often that pattern of thought preceded disaster in the sordid list of very expensive and highly embarrassing incidents of corporate fraud around the world.
Some questions to ask yourself (Be honest, now!):
• How fraud-resistant is our organization? Or our clients’ organizations?
• How do I know the level of fraud resistance we enjoy?
• Is the culture of our firm one of above-reproach ethical behaviors? Where are we on the spectrum?
• Where are our weak spots for fraud?
• Do we have tangible resources to encourage the whistle blowing of risky mischief? To buttress our system of internal hard controls with the soft controls of people-focused actions?
• How strong is our ethical ecosystem? Can it withstand a beckoning temptation to take advantage of internal control weaknesses?
The graveyard of companies ruined by poor “soft” controls (those based on psychological materiality)—the weakest links–have ripples that spin out to their broader systems. This could be you.
If this post jars your otherwise serene outlook on fraud risk in your organization, you must check out a virtual conference coming in mid-February, 2023. It is the Fraud, Cyber & Governance Conference: Creating a Fraud-Resistant Organization. This conference will be held February 15-16 virtually, sponsored by Financial Executives International, Behavioral Forensics Group, LLC, and the University of Dayton Center for Cybersecurity and Data Intelligence. CPE-qualified (8 hours), the 2023 FEI/B4G/UDCC Conference topics include:
o Reframing Your Understanding of Fraud;
o Why Does Fraud Happen?
o The Escalating Threat of Cyber Fraud
o Emerging Issues in Fraud
o Fraud Experiences
o Tools and Competencies to Prevent/Deter/Detect Fraud
o Governance: Creating and Leading a Fraud-Resistant Organization
With world-class speakers (see the agenda), The Conference will blend thought leadership with concrete action suggestions and experiences. Click on link:
BEHAVIORAL FORENSICS GROUPTM LLC
The Behavioral Forensics GroupTM LLC is a team of professionals with vast experience in detecting fraud, understanding why it occurs, and in recommending steps to mitigate fraud incidence within the corporate workplace, particularly within higher-level (and therefore more costly to the enterprise) executives. The fields of investigation, organizational psychiatry, accounting and behavioral forensics, and law enforcement are represented within the Behavioral Forensics GroupTM LLC. Acting in synergy to help organizations prevent, find, and/or reduce fraud, B4GTM is a premier, pioneering practice in this field.
We are blogging at: http://www.bringingfreudtofraud.com