Problems such as fraud, hacking, and identity theft are rampant nowadays. No matter how small or large your business is or what industry you’re in, you can’t afford to overlook these issues. Fraud can be extremely costly and even destroy your business. It can also leave you liable to lawsuits from customers if their money or data is stolen. Let’s look at some of the most common types of fraud and how you can protect yourself and have a fraud-proof business.
Two Types of Fraud
When it comes to business security and safeguarding against fraud, you need to consider two general categories: internal and external fraud. Ignoring or downplaying either of these leaves you vulnerable to many unpleasant possibilities. Internal fraud refers to threats that originate within your own business. If your own employees are stealing your data or money it can be extremely difficult to detect until after the fact. External fraud refers to hackers, who can be from anywhere in the world, breaking into your system and stealing your data. Both types of fraud are very dangerous to your business. You need a different strategy for each, however.
Protecting Against Internal Fraud
- Hire carefully. Prevention is the best approach to internal fraud. Conduct thorough background checks before you hire anyone for a position that provides access to sensitive information.
- Provide limited access to any one individual. If you separate tasks so that different people are responsible for each one, you reduce your risk. For example, have one person enter the information about a financial transaction and someone else approves it.
- Use third-party auditors. Auditing your business regularly helps you keep track of everything and lets you spot any suspicious activity early.
- Use a computerized inventory system. Automating your inventory system helps you save time and gives you a more accurate picture of what you possess. This makes it easier to notice irregularities.
Protecting Against External Fraud
- Train employees. Train all employees on preventive measures such as using strong passwords, recognizing suspicious emails and scanning flash drives.
- Use two-factor authentication. This provides an additional layer of security for anyone trying to access your system aside from username and password.
- Install the latest firewalls and virus protection. This won’t prevent all types of attacks but it will at least discourage all but the most professional and determined hackers. You should also safeguard data by backing everything up daily.
- Use geofencing and device identification for enhanced security. Geofencing is a system of blocking devices outside a specified location. This, of course, is only practical if your customers are within a certain area. Device identification makes it possible to match customers and accounts to specific devices.
These are some of the most effective ways to have a fraud-proof business. Business security, of course, is only one aspect of business success. We also cover cyber security and how you can protect your business online.
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