Businesses - Don’t take a rain check on risk management

It pays to check the weather before going out. I was always told that. ‘Take an umbrella they say it’s going to rain!’ ‘They’ are usually right and if I don’t prepare for the rain, I end up getting drenched. The same principle applies in business. Listening to what experts recommend can help you plan and prepare and that is particularly important right now as the UK is in for some uncertain economic times.

The global Covid-19 pandemic has undoubtedly impacted businesses across the world and the knock-on effect on the UK economy means there is a real possibility of a longer economic problem. Brexit could also lead to further economic uncertainty. In this uncertain time, it is likely that we will see an increase in fraudulent activity too.

A poll carried out at the recent Cifas Annual Conference revealed that 153 of the country’s senior fraud professionals believed that 80% of companies are not prepared for the increased fraud risk. Furthermore, 61% of these respondents said that fraud would increase in 2020. More interestingly, all of these fraud professionals agreed that Covid-19 would either have some or a significant impact on levels of fraud. It seems UK business are worryingly unprepared for what might be round the corner.

While we have had to adapt our resources to combat the growing threat presented by the pandemic, Cifas and its members have seen a significant rise in criminals exploiting the rush to support businesses with loans and grants. To help combat this, Cifas was able to provide help in screening government and local government grant schemes including the furlough scheme, local authority grants and bounce back loans which have been created to support businesses amid the pandemic.

We successfully highlighted duplicate applications and situations where criminals had created businesses in order to apply for grants and loans.

In previous economic downturns we have seen demand fall and businesses struggle to access capital and good customers. Inevitably, this leads to organisations taking greater risks in a bid to meet their revenue objectives. With the next economic downturn coming down on us quickly, it is essential for UK businesses to start planning and preparing their fraud risk policies and stick to the principles of good business risk management.

As they say, ‘forewarned is forearmed’ and the dark clouds are certainly on the near horizon, so having fraud risk policies and good business risk management is essential in the current climate. UK businesses can ride out the storm if they are prepared.