Screening processes to mitigate employee fraud Screening processes to mitigate employee fraud

During times of crisis, the number of cases of fraud and misconduct grow substantially as unprincipled individuals often seek to take a personal advantage of the situation. From a company's perspective, the unethical or illegal behavior of a single employee may be enough to significantly impact its reputation and force it out of business. Given today's context of uncertainty with the COVID-19 pandemic, trust between a company and its workforce is crucial. In order to mitigate the risks of employee fraud and misconduct, firms must adopt a forensic mindset and perform in-depth background screening processes.

In an earlier blog article we have drawn the need to conduct a periodic review of existing employees. Today we would like to highlight some new challenges companies are facing when implementing a robust and comprehensive screening process to mitigate employee fraud.

The current pandemic has shown that companies must take pre-employment screening and vetting processes to the next level and think in terms of life cycles. On top of conducting background checks of candidates at the time of hire, companies must now integrate periodic re-evaluations of existing employees. This enables organizations to significantly reduce the risk of insider threat – an employee's misuse of sensible information to harm the company's interests – by regularly assessing each employee's work satisfaction, responsibilities and access to sensible information before they may cause any harm to the firm's critical assets.

Periodic re-evaluations also help firms mitigate the risks inherent to the nature of their business. These risks which may include financial loss, money laundering, operations risks, and misappropriation of assets are often subject to the actions and performance of a specific role within the firm. Given that employees' positions and duties evolve over time, periodic re-evaluations are essential to ensure the company does not take on added risk when entrusting an employee with new responsibilities. 

The magnitude of the risks also varies substantially based on the position of the employee within the firm which is why evaluations must be tailored to each employee and function. In fact, an individual's wrongdoing may be considered inconsequential in one situation while it may jeopardize the reputation of the whole firm in another depending on the professional function held by the employee. Companies must identify the potential risks posed by each function and adjust the evaluations and their thoroughness accordingly. Higher seniority might entail greater responsibilities and respectively superior risk. It is therefore recommended to define different screening types based on the functions for instance, "basic, standard, enhanced, update for the annual review". In-depth interviews can be conducted to measure the risk an employee represents to the firm by assessing the way in which they respond to ethical dilemmas they are presented with as well as to assess the understanding of the corporate's culture.

In short, background check processes during the recruitment phase enable companies to hire individuals who meet the recruitment criteria pre-define by the employer based on its risk appetite. Regular subsequent evaluations help companies ensure they can trust their employees with specific responsibilities and minimize the risks of employee fraud and misconduct. 

As we continue to face uncertainty and the struggles of the coronavirus crisis, these measures are and will remain essential to enhance the overall security of your organization. Moreover, the complexity of background checks will increase as individuals find innovative ways to take advantage of the crisis.

In the current context of economic crisis, job seekers feel added pressure to find work. Increased competition in labor markets due to higher unemployment and fewer vacancies leads malevolent or in distress people to fraudulent practices. Such practices have also become increasingly recurrent in the past year as people use the burden of the pandemic to justify unethical behavior. These individuals constantly look for innovative and illegitimate ways to improve their CV and standout which increases the complexity of background checks. As countries went into lockdown, online university degrees and certifications have become common place and made it easier for individuals to inaccurately describe their qualifications by purchasing fabricated diplomas. These fake credentials which can easily be bought online are on the rise and stress the importance of thorough background checks. Validating a candidate's or employee's achievements by simply going through the records now proves to be insufficient as the legitimacy of the universities delivering the diplomas must be validated. In fact, companies must verify that their employees' diplomas have been delivered by institutions that have been fully accredited by the state in which they operate.

Opportunities for fraud such as fake diplomas will continue to arise in the current context of uncertainty and will become harder to detect. The only way companies can mitigate the risks linked to employee fraud is by fully integrating comprehensive screening processes in the overall decision-making framework of the company. These processes need to be conducted on a regular basis and should be tailored to each specific employee and position to increase their effectiveness.