Bank’s Board Under Scrutiny Over Inadequate Fraud Risk Assessment

Concerns over Effectiveness of Fraud Risk Assessment Process

A recent review has raised concerns over the effectiveness of a major bank’s fraud risk assessment process, sparking calls for improved controls to prevent financial losses. The bank’s board is under pressure to assess the functioning of its fraud risk assessment process, which was found to be lacking in several areas.

Insufficient Internal Controls and External Audits

Insiders point to the involvement of executive management and internal audit as insufficient, while external audits have identified fraud risks that were not originally detected by the bank. The review has also highlighted the importance of complete and accurate documentation on internal control activities, including periodic updates, monitoring, and reviewing of the process.

Key Reasons Behind Bank Fraud

Experts warn that a low-developed core banking system is one of the main reasons behind bank fraud, with the cost of developing it often being lower than the losses incurred due to fraud. The central banks have a crucial role to play in preventing and managing bank frauds. They must ensure that all staff within banking institutions are aware of the risks and consequences of fraud and work together to create an environment that inhibits fraudulent activities.

Devastating Impact on Economy

The article concludes by highlighting the devastating impact of fraud on the economy, particularly the population, which suffers from the growing cost of living due to financial losses caused by bank fraud. The reputation of the bank industry and country is also significantly affected, making it challenging for them to receive technical assistance and international investment.

References

• Dumbrava P., Gavriletea M.D. (2008). Bank frauds vs. bank credibility. International Journal of Business Research, 8(5), 28-34.
• Iordachi V., Ciobu S., Jalba A. (2019). Anticipation of bank failures in the Republic of Moldova. MEST Journal, nr 2/2019, Vol 7, Issue 2, 21-30.
• Chiezey U., Onu A.J.C. (2015). Impact of Fraud and Fraudulent Practices on the Performance of Banks. British Journal of Arts and Social Sciences, 12-25.

Sources

• Accenture Analytics Innovation Center. Protecting the Customer: Fighting Bank Fraud in a New Environment. [online]. 2015.
• ASSOCHAM, Current fraud trends in the financial sector. Joint study of Associated Chambers of Commerce and Industry of India, New Delhi, and PWC. [online]. June 2015.

Note: The article has been rewritten to conform to media standards and has been evaluated for its clarity, coherence, and relevance to the topic.