In some companies, fraud is often considered just a support function. They hire a fraud investigator or two. Those investigators field incoming calls from customers that are victims of identity theft, and that’s about it. The companies view on fraud is not strategic and they often don’t consider hiring a great leader to help them lead the effort.
But hiring a great fraud manager is critically important but it so often overlooked by most companies and they cheap out and just pursue a minimal fraud strategy.
Pretending fraud doesn’t exist is like burying your head in the sand
A minimal strategy often seems to work for awhile. But it’s typically a false sense of security. When you don’t look for fraud, you don’t find it. Your reported fraud losses appear very low.
Everything seems perfect. But it is not. In these cases, fraud is often just buried in bad debt. It’s like an ostrich burying his head in the sand. Just because he is not looking does not mean the danger is not happening around him.
I worked with a bank a few years ago that used this very limited strategy and they ended up taking nearly catastrophic losses when they discovered over $100 million in fraud that was sitting on their books – undetected, undiscovered until an auditor located the hidden fraud in a routine audit of charged-off losses.
So here is what I think. A great fraud manager is a mission-critical hire. They can help an organization avoid a bury your head in the sand strategy, and they can help an organization avoid catastrophic losses.
Here are my Top 5 Reasons Why You Need to Hire a Great Fraud Manager
#1 – Because A Great Fraud Manager is Worth 18 Times Their Weight in Gold
A great fraud manager is worth their weight in gold to an organization. Actually, they are probably worth 18 times their weight in gold! I am totally serious about this.
Let’s look at the math. If the average fraud manager weighs 150 pounds then they are worth $2.9 million dollars in gold. If they saved your bank $2.9 million a year, that would be nice. But most don’t. They save you substantially more – about 18 to 100 times more actually.
If you take the average bank, a great Fraud Manager and their team will save you an average of $50,000 in fraud losses each and every single day. That equates to over $18 million dollars a year.
Fraud Managers are worth their weight in gold, and then some!
Striking a balance between fraud prevention and customer impact is the hardest part of any organization. The focus shifts so much it’s like riding a see-saw, and so often organizations fail to strike the optimal balance between impact on fraud and impact on the customer.
One day bank executives tell you to turn off fraud strategies to decline fewer customers. Customer service is the focus of the business and everyone seems to move in that direction to achieve that goal.
The next month, fraud losses have increased because strategies were turned off, and once again the fraud manager is asked to reduce fraud losses. In those times, the focus on customer impact may be minimal while the business tries to drive down fraud.
This is the see-saw life that a great fraud manager will often lead and help your organization achieve the right balance. A great fraud manager will guide you achieve the balance between both customer focus and fraud focus.
#3 – Because A Great Fraud Manager Could Save Your Job
Fraud losses can bury a company and force the company to engage in major layoffs or pay hundreds of millions in fines.
Let’s take Wells Fargo’s Ghost Account problem for example. Wells Fargo fired 5,300 employees between 2011 through 2016 for setting up “ghost accounts” that customers were unaware of. I should know I was a customer that had this happen to me. Employees were badgered and pressured by managers to make sure that customers opened up multiple accounts at Wells Fargo since it was part of a program called “Gr-Eight” (a program to push to 8 products for each customer)
By the time the fraud was completely uncovered, 3.4 million fake customer accounts were detected. The fallout was enormous. Executives lost their jobs. The stock lost 25% of it’s value. Regulators pounced on the bank.
Fraud has serious and far lasting impacts. A great fraud manager can help you avoid those mistakes and save your job!
#4 – Because Great Fraud Managers Are Great Persuaders Of Doing The Right Thing
Great Fraud Managers are great persuaders. They are made during the good times. During the times when fraud is low. When fraud is boring. When no one in the company wants to spend a dime on new fraud initiatives because fraud is simply not a problem.
It is during these times that great fraud managers prove their mettle by keeping the organization focused and keep the organization investing to prevent the fraud that will undoubtedly happen soon.
Great fraud managers are able to go head to head with marketing, with sales, and with all the competing interest and be the voice of fraud. They keep the organization in check. The go against the status quo. They keep pushing even when it is not a popular opinion.
#5 – Because A Great Fraud Manager Can Predict The Future
A good fraud manager can see around the corner. They can predict what fraud trend will likely hit next and help your organization invest in technology to stop it before it even starts.
A good fraud manager helps you set a strategy for today. But a great fraud manager helps you set the strategy for tomorrow.
I often notice certain banks always seem to be immune to spikes in fraud. Fraud losses seem to plod along a predictable clip, month after month. And that is because they have great fraud managers that always keep things in check by predicting the next big thing.
Hire a Great Fraud Manager
I hope you enjoyed reading the blog. Remember don’t cheap out on your fraud manager. Get a great one. Look at it like an insurance policy that could one day save your job!