Excerpted and adapted from “Corporate Resiliency: Managing the Growing Risk of Fraud and Corruption,” by Toby J.F. Bishop, CFE, CPA, FCA, and Frank E. Hydoski, Ph.D. ©2009 by John Wiley & Sons Inc. Used with permission.
Resilient corporations generally take a three-pronged strategy to deal with the problem of fraud: they conduct thorough fraud risk assessments and periodically revisit them; they put fraud prevention and detection strategies in place; and they develop response strategies to deal with the frauds they aren’t able to prevent.
Ben Mueller was a hard worker who moved his way up from vice president of sales and marketing to CEO of his Fortune 500 firm. But he wasn’t quite prepared when the Securities and Exchange Commission came knocking at his door requesting a meeting. When the SEC announced it would be investigating fraud at the firm, he was ill-prepared to deal with the onslaught of new public scrutiny and the investigation itself.
It wasn’t long before the firm’s board of directors was asking him to tender his resignation. It all could have been avoided if he’d had a response prepared and a fraud prevention and reporting plan already in place. Ben simply thought the extra procedures to be an unnecessary addition to the company’s current – and apparently outdated – risk-management system.