Shrinkage, Fraud and Other Hidden Parts of Business Continuity Management

Sometimes we get so wrapped up in business continuity management that deals with natural disasters or accidental breakage that it’s all too easy to forget about another dimension: deliberate acts that damage the worth of an organisation. Even if terrorism and activism get publicity, theft and fraud often remain in the background. And yet there’s a parallel with floods and fires that often get into the spotlight, compared to computer hardware failures. Disk crashes are much less mediatised, but responsible for far more business interruption. Likewise, spectacular sabotage makes the news, but a greater overall source of loss is ‘shrinkage’ – theft or pilfering perpetrated by employees.

In an organisation where attention is riveted on external risk factors, fraud can flourish as well. A recent report from consultancy company KPMG in the UK cites figures that show over £0.5 billion (about AUD $0.8 billion) in business fraud cases in the first six months of 2013. KPMG says supply chain fraud is a key factor in what is a rising trend. It gives examples of governments and financial bodies being major victims, but of investors, health centres and charities also suffering.

High profile cases of fraud make it into the media. Scandals involving adulterated food and fake safety equipment immediately raise public outcry, but some of the more mundane cases go largely unreported. They may even be unnoticed within organisations concerned. Just like security breaches, what we actually hear about may only the tip of the iceberg; the rest is accepted as a business hazard, swept under the carpet, or unwittingly camouflaged. But like security breaches, the best business continuity protection against shrinkage, fraud and the like starts with prevention using the right business procedures and processes.