Each year, businesses around the world lose an estimated 5% of their revenue to fraud, according to the Association of Certified Fraud Examiners (ACFE). That may not sound like much at first, until you calculate what 5% means for your organization’s bottom line. For many small businesses, that could be the difference between hiring new staff or tightening budgets, expanding operations or scaling back.
As we recognize International Fraud Awareness Week, Stone Bank encourages all business owners to take time to understand what fraud looks like, why it happens, and how to prevent it.
What Is Fraud and Why It Matters
Fraud is any intentional act of deception designed for personal or financial gain. In the workplace, this is known as occupational fraud—when someone inside the organization misuses company assets or resources.
It’s more common than you might think. Occupational fraud not only costs organizations billions each year, but it can also erode employee morale, damage reputations, and destroy public trust.
Think about it: Would you invest in or do business with a company that’s been defrauded by its own employees? That’s why prevention and awareness are key.
Common Types of Occupational Fraud
The ACFE classifies occupational fraud into three main categories:
- Asset Misappropriation: The most common form, involving theft or misuse of company assets such as cash, inventory, or equipment.
- Corruption: When employees abuse their position or influence for personal benefit, such as taking bribes or engaging in conflicts of interest.
- Financial Statement Fraud: Intentional misreporting of financial data to mislead stakeholders, such as inflating revenues or concealing liabilities.
Red Flags to Watch For
While anyone can commit fraud, the following behavioral red flags often appear in fraud cases:
- Living beyond one’s means
- Unexplained financial difficulties
- Close relationships with vendors or customers
- Unwillingness to share duties or take time off
- Defensiveness or irritability when questioned
- A “wheeler-dealer” attitude toward business decisions
Awareness of these warning signs allows organizations to intervene early, before small issues become major losses.
How to Protect Your Business
Preventing fraud requires everyone’s involvement, from leadership to front-line employees. Here are proven steps to strengthen your organization’s defenses:
- Establish a company-wide code of conduct
- Implement internal and external audits
- Require management certification of financial statements
- Create anonymous reporting hotlines
- Provide fraud awareness training for employees
- Encourage open communication and ethical accountability
Organizations that conduct regular fraud training experience up to 38% lower median losses per incident, according to the ACFE.
Stone Bank Encourages You to Be a Fraud Fighter
At Stone Bank, we believe that financial integrity starts with awareness. Whether you manage a small business or a large organization, protecting your assets means staying alert, fostering transparency, and creating a culture where fraud cannot thrive.
During International Fraud Awareness Week, take the time to review your anti-fraud policies, educate your team, and ensure you have the right controls in place.
Learn more at FraudWeek.com, and join the global effort to stop fraud before it starts.
This information is for general education purposes only and not to be used as tax or legal advice. The opinions and recommendations expressed herein are those of the author(s) and not necessarily those of Stone Bank. Stone Bank’s website may contain links to websites of other organizations that are no longer protected by our privacy policy or security practices. Stone Bank nor any of their employees assume any legal liability for the accuracy, completeness, or usefulness of this information.