Human Resources: The cornerstone of deterrence

Human talent or human resources departments, is the cornerstone of corporate fraud prevention. The selection of the ideal employee has to go beyond the subjective search of suitable candidates who meet the technical and intellectual conditions of the position to be filled. The analysis of the physical and mental aptitudes of the applicants through interviews and tests are in many cases more important than the technical requirements to determine that a person's character aligns with the corporation's values. This search must be the first deterrent against fraud. 

As is well known, the human factor is fundamental for business development. Although the means of production are increasingly automated or robotized, labor and talent continue to strengthen industries throughout the world. On the other hand, business success is tainted by those who somehow let themselves be conquered by anti-values ​​and act against the organization to feed their pockets fraudulently. That is why fraud prevention programs must include the processes of recruiting, selecting, and hiring employees. The dissuasion of fraud begins with the first moment of contact that the job seeker has with the company; an atmosphere of total control and a strong attitude towards fraud are the basic tools of deterrence.

We all know perpetrators are in all spheres and do everything necessary to break the rules with the sole purpose of increasing their assets and sustaining their life style. Offenders monitor and detect the opportunities, deficiencies, and lack of control of their target. Their keen sense of smell and instinct to detect lax controls help them to create the necessary strategies to take corporate money and resources for their own gain. Fraudsters have no scruples, and in many cases, they look for companies with administrative and financial deficiencies; a perpetrator targets and profiles their victim carefully. Nevertheless, how can a businessperson protect his or her organization through Human Resources or contracting department?

The Internal Labor Regulation is the most basic and well-known tool in the world of work. Its wording should contain fundamental aspects related to corporate fraud and the risks to which the company is exposed in these types of issues. That is to say, that the Code of employees should not be the simple and traditional compilation of clauses or articles related to labor. The code of employees must be aligned with good corporate governance and an environment of control where the relationship between the company and the new employee must be based on zero tolerance to fraud. For instance, the implementation of fraud programs through guidance, oversight, and risk control discourage job seekers and new employees to commit fraud. Additionally, an environment of control based on ethics and transparency across the organization helps to retain employees who are committed to the core values of the company.

The risk management program is another advanced resource that helps to shield the company from catastrophic economic and reputational damage. In business, it is cheaper to prevent rather to correct. This philosophy directly applies to fraud prevention as well. Thus, a corporation must implement an Internal Work Regulation or code of employees that defines strict punishment for fraud in the corporation. Furthermore, the processes of recruitment, selection, and hiring of personnel that are developed by Human Resources should be the cornerstone of any fraud prevention program so that the anti-fraud attitude becomes a working lifestyle for everyone in the corporation.

Editor Christopher Bonk