Chief Financial Officers have always played a strategic part in managing risk, notably regarding their advisory role and position as a stakeholder, their ability to clarify and facilitate decision-making, and their in-depth knowledge of organisations through financial data analysis.
But now their role is not only to crunch the numbers, but to help safeguard and nurture a business through new and significant perils. They must adapt all these newly learnt skills to face new and more aggressive forms of fraud, extending beyond traditional types such as internal embezzlement and industrial espionage.
Fraud in the digital age poses a multi-faceted problem for all businesses. Any irregularities in processes can be pounced upon by preying fraudsters, and with technology constantly evolving it’s the role of the CFO now to help manage a team adept at using technology and make everyone aware of the wider strategic implications.
Here are 7 key elements every CFO should adopt to effectively fight against fraud:
Make risk management your priority
Companies worldwide have lost more than $7 billion due to fraud. However, despite these alarming figures, a report by PwC confirms that only half of the organisations surveyed say that they carried out a global evaluation regarding fraud over the past two years. That figure is still far too low given the many downsides of falling victim to fraud.
Automate your processes
Opportunities for invoice fraud may arise from vulnerabilities in processes. In many cases, these vulnerabilities may be “easily” rectified by automating time-consuming and repetitive tasks that are sources for errors. Chief Financial Officers who have adopted automation also see an additional opportunity to enable their team to focus their efforts on statistical analysis, risk prevention and strategic consulting.
Communicate with IT
30% of CFOs and Information System Directors (CIOs) agree on at least one point: CFOs have an outdated perspective of CIOs. People often talk about a conflicting relationship between CFOs and CIOs: misunderstanding, notably a lack of technical expertise vs. a lack of business vision. In today’s context of digital transformation, facing increasing security vulnerabilities, sensitive data may be at risk, including client files, bank account details, patents, and more. CFOs and CIOs must therefore learn how to work together: while the CFO remains the protector of cost-related and payment factors, the CIO’s role is essential for helping finance departments manage data and technology tools.
Acquire new skills
Data, which has become an undisputed source of value for the company’s strategic growth decisions, is now also the cornerstone for CFOs, nonetheless introducing perils related to data integrity and security. CFOs need to work with experts to master this data science and therefore rise to the occasion in their effort to fight fraud and improve reporting. The PwC report confirms this trend, stating that CFOs in 2019 were convinced of the need to surround themselves with new talent, people with technical-operational profiles able to master software robots. This includes data scientists, business analysts, and more.
Engage internal stakeholders
Regardless of their form, organizational transformation projects yield their full potential when teams are actively committed. This applies even more when handling issues related to fraud, as the human factor is often the primary source of fraud. Training employees and raising awareness must therefore be among the CFO’s top priorities.
Implement a cloud-based automation solution
For 83% of CFOs (compared to 31% in 2016), the Cloud has become inevitable in every area including document digitalisation, closing files and cash management. Suppliers today are in a position to offer robust and secure environments that are ISO certified and accessible to all organisations.
Choose the right technology tools
There are now some very effective technology tools for supporting finance departments in their fight against fraudsters. But how do you choose the right one? Invoice Automation tools have become essential for financial decision makers and are now more operational than ever. In addition to ensuring total traceability of all actions taken regarding invoices, the most advanced tools also integrate algorithms capable of extracting all the data present in those documents in order to detect and prevent document fraud and trigger alerts if abnormal data and information are detected.
Fraud will continue to pose significant issues that will plague many CFOs as technology evolves and we move to an even more digital world. But while the advancement of technology-led attacks may create greater problems for CFO’s, they must also look to technology to help fight against them. AI-based platforms are able to predict and analyse any irregularities, while cloud-based systems are constantly advancing to offer stronger security and automated processes to minimise danger.
The question for CFOs isn’t if they’ll become a target of fraud, but when, and CFOs must start looking towards technology to help shore up defences and reassure stakeholders.