Fraud risk management must address regulatory norms

New Delhi, Nov 6 (UNI) In order to manage the risk of fraud, companies need to view it as an ongoing process and should continuously evaluate the effectiveness of their risk strategy and controls in light of developments in the market or regulatory environment.

An effective, business-driven fraud and misconduct risk-management approach has three primary objectives -- prevention, detection and response, KPMG Chairman (Forensic) Adam Bates says in a white paper released today by logistics-provider KPMG International.

The paper on ''Fraud Risk Management: Developing a Strategy for Prevention, Detection and Response'' provides an insight into what the fraud risk management requires.

The challenge for companies is to adopt a comprehensive and integrated approach that enables all of the organisation's control criteria in these three areas to work together, Mr Bates adds.

Faced with an increasing array of frameworks and standards covering business conduct, many worldwide organisations continue to struggle with how to mitigate the innumerable risks posed by fraud and misconduct.

The development of an integrated fraud risk management programme will not only help support compliance with regulatory mandates but may also assist an organisation protect its assets, including its reputation, the paper says.

Effective fraud risk management provides an organisation with tools to manage fraud and misconduct risk in a manner that meets regulatory requirements, as well as the entity's business needs and marketplace expectations, according to the paper.

''In view of the changes in the regulatory environment by introduction of Clause 49 and other such regulations, the companies need to take a strategic approach to fraud risk management by aligning corporate values with performance,'' KPMG Head (Forensic Services, India) Deepankar Sanwalka says.

Fraud risk management must become part of the corporate culture.

The board, senior management, internal audit, in fact all employees, have a role to play to ensure that the company is enacting and achieving ethical and responsible business practices, he added.

KPMG International in India respond to a client service environment by leveraging the resources of a globally aligned organisation and providing detailed knowledge of local laws, regulations, markets and competition.

In India, KPMG's provides audit, tax and advisory services to over 2,000 international and national clients in the West and South Asia.

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