By Peter L. Higgins
We did a quick analysis today on what's in the news, or better said, how much corporate fraud is off to a great start for 2004! What's new? It's all new.
Your search for fraud / today returned:
27 articles - New York Times
8 articles - Wall Street Journal
Topics of Interest include:
New President Ireland to Press For Immigration Policy Action
Italy Gets Set To Re-Examine How It Regulates
Prosecutors Charge Executive and Lawyer With Fraud Over IPO
Scandal Reaches Far and High
Stricter Rules on Bonds Are Sought
Tyco Former Director Testifies
U.S. Government Removes Its Ban on Bids by MCI
What Mutual-Fund Scandal?
Searching other sites such as the BBC and LA Times produced similar results. Why is it that fraud is such a news worthy item? Or at least this word is used so frequently as an adjective. Definition of Fraud:
Fraud n 1: DECEIT, TRICKERY 2: TRICK 3: IMPOSTER, CHEAT
Fraudulent adj : characterized by, based on, or done by fraud: DECEITFUL
Is it that people like reading about cheats and impostors because they enjoy seeing how they get caught? Is it that they feel better that they aren't the only ones? Or is it that they want to make sure that they don't make the same mistakes.
Our organizations today are full of everyday cheats, impostors and fraudulent activity. The sales person who inflates their expense report so they can afford to buy the wife a nice piece of jewelry is just as much a crook as Andrew Fastow of Enron or Calisto Tanzi of Parmalat. It's not as if they don't know any better. They do know that they are cheating or being deceitful. They do it because they can, and no one has told them to stop.
The risks of employing people to run an organization are going to multiply until we figure out ways to keep humans out of each business process. And even then, human greed or lust for power or some other innate motivation will cause someone to figure out how to beat the system. As an investor and as a business owner you can only do one thing that will diminish your losses.
Be proactive. Be preventive. And be Relevant. All the locks, safes, controls, alarms, fences, procedures, education, laws and penalties will not stop the loss events. Only one thing will keep you from a total loss or complete business paralysis.
We've all heard it over and over. Yet we continue to dismiss the fact that our organization is different today than it was yesterday. That the world has changed since the cold war. That zeros and ones could arguably be our most valuable assets. Information and data will endure beyond the life span of any human leader or organization through out history.
The zeros and ones game is a change management game. Those who master the art of managing information will be able to adapt faster than the attackers. Whether they be digital, human or mother nature.
How do you feel about the integrity of your loss event database? The speed that you get the correct answer. What if the answer was never correct? Guess what. The risk factors being played out today are different than it was last month. Or last year.
Collusion. Embezzlement. Churning. Market manipulation. Limit Breach. Wrongful termination. Harassment. Non-adherence. Failure of due diligence. Input error. Insufficient capacity. Reconciliation failure. Inappropriate contract terms. Product complexity. Poor advice. Obsolescence. Network failure. Project overruns. Programming error. Bug. Security breach. Money Laundering. Terrorism. Arson. Robbery. Blackmail. Vandalism. Natural disaster. Bankruptcy. Breach of service. Loss of power. Regulations. Laws. New employees. And the list goes on.
Have a great day!