Behavioral Red Flags of Fraud
Occupational fraud, which is fraud committed by individuals against the organizations that employ them, has the potential to be committed by any individual in the workforce. Given such a broad pool of potential fraudsters, it may seem like there would be no way to build in the appropriate safeguards to protect an organization from fraud. However, there are red flag behaviors generally exhibited by fraudsters that can be used to assist organizations in identifying potential risks and developing appropriate fraud prevention measures.
Per the ACFE Occupational Fraud 2024: A Report to the Nations, 75% of fraud perpetrators displayed at least one of eight behavioral red flags.
The most common behavior consistently exhibited by fraudsters is that they are living beyond their means; the next seven most common warning signs are from individuals who:
- are experiencing financial difficulties
- have unusually close associations with vendors and/or customers
- exhibit control issues, which include an unwillingness to share job duties
- are irritable, suspicious, or defensive
- have a “wheeler-dealer” attitude
- exhibit bullying or intimidating behavior
- are going through divorce or family problems
Companies can improve their fraud detection measures by taking these warning sign behaviors into consideration when building their anti-fraud programs. Fraud examiners, such as the team at Ahuja & Consultants, Inc., can be a useful resource in this process as they have the knowledge and background to not only consider behavioral red flags in developing fraud prevention measures, but to delve deeper and assist organizations in identifying potential risks.
