Internal Threats

Businesses who are victims of frauds from an external source can usually survive the experience and trade through it; however the impact of a fraud perpetrated by an employee or officer of a company has by far the most devastating effect.

An internal fraud will usually have been in progress for some considerable period of time and have been perpetrated a trusted or valued employee. It is not unusual for some of the staff to have suspected fraud but not been able bring it to the attention of senior management for this reason the effect on staff morale of internal fraud is significant.

Many sound businesses fail due to internal fraud not because of the financial cost of the fraud but because suppliers and customers loose faith, particularly if the fraud has involved them being served with false or misleading documents. Moreover it is not unknown for customers or suppliers to mitigate their own problems on the back of another business's fraud making the value of the fraud appear much greater.

Competitors will use the fraud as an opportunity to poach customers and tarnish your business's image in the market place. The initial suspicion or discovery of a fraud will disrupt the business at the very time you need to be efficient. A long police investigation may add to these problems. These factors will also have additional negative impact on the morale of your staff.