Mitigating Financial Fraud Risks with these Simple Steps

Mitigating Financial Fraud Risks with these Simple Steps

By CFO Tech Outlook | Thursday, March 21, 2019

Financial operations face several challenges in every industry, such as the need for more customized service to consumers and demand of stakeholders, increased safety risks, and cost-effective management. Adapting new methods or technologies that can regulate with this digital world is essential to mitigate these challenges.

Recently, Pamela Moulton and Fang Liu published a CHR report that, on an average, an organization loses 5 percent of its annual revenue to fraud, predicted from the Report to the Nations global study on Occupational Fraud and Abuse. In particular, hotels are estimated to lose an average of 5 to 6 percent of revenue from fraud, while the National Restaurant Association estimates restaurants to lose 4 percent of revenue from fraud on average. These are not a profit but are losses as a percentage of top-line revenues, which means that their magnitudes pose a significant risk to the methodology of hospitality to detect financial irregularities that can signal fraud based on a mathematical principle well-known as Benford’s Law.

Due to the relatively thin net margins of the industry, the analysis presented here may perhaps allow firms. This study provides a simple application by managers of the hospitality industry at all levels, from individual units or departments to whole regions or businesses. The Cornell Hospitality Tool that accompanies this report provides a user-friendly spreadsheet-based application used for quick analysis of any set of financial values to detect suspicious activities in guest checks, receivables, payables, or reimbursements.

Check Out : Top Fintech Companies 

Regardless of the best efforts of operators, the nature of the hospitality industry—with its numerous disparate transactions and potential internal control failure—exposes its companies to financial fraud. Ideally, for instance, a good hotel manager wants to spend his or her time welcoming guests and creating a good experience for them, rather than spending a long time with a fine-tooth comb through guest checks, payables, and receivables. Similarly, in their busy times, restaurant managers move at considerable speed. Also, managers are well aware that if internal controls are not in place or are being subverted, by the time auditors review the books after the end of the year, significant sums may already be lost. End-to-end cloud storage encryption reduces the likelihood of data breach for organizations. Creating a well-organized hybrid cloud environment will bring increased market value and operational efficiencies to organizations on financial services.

Top Fintech CompaniesAbakusApps , Avant Corporation , International Decision System

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