How to Reduce Fraud Risks in the Workplace

• Splitting key tasks between staff makes it harder for individuals to commit internal fraud.
• Clear policies, codes of conduct and establishing safe ways to report issues help reduce fraud risks in the workplace.
• Providing staff with fraud awareness training helps set expectations and promote vigilance.

Fraud describes one party knowingly deceiving another for power, property or, most often, money.

Within any organisation, there are opportunities for fraud – vulnerable transactions or blind spots someone could exploit for personal gain. Fraud risk combines how likely this is to happen with how severe the loss could be.

It’s the same concept used in health and safety, where risk reflects both the likelihood of harm and how serious that harm would be. For example, working at height is a high-risk activity because a fall can be lethal; employers can reduce the risk by installing guardrails or providing harnesses that prevent falls.

You can apply this thinking to fraud. For example, reimbursing employees for expenses without checking receipts is high risk. You reduce that risk by requiring itemised proof of purchase and approval before payment.

Workplace fraud mainly refers to internal fraud, where someone within an organisation abuses their position to gain a personal benefit or cause loss to the business.

It includes actions such as:

• Stealing money or assets
• Falsifying expenses or records
• Manipulating payroll
• Diverting payments

Because it’s committed by trusted insiders – such as employees, managers or contractors – internal fraud can be harder to detect than external scams.

Fraud should be a major concern for all organisations. In 2024, fraud accounted for 43% of all reported crimes – a higher percentage than any other offence and a 33% increase from the year before.

Internal fraud has seen a particularly sharp rise. According to data from Cifas, cases of employees stealing from their employer or customer accounts rose by 74% in the first nine months of 2023 compared with the same period in 2022.

Almost half of all recorded cases (48%) involved “dishonest conduct” such as manipulating systems, diverting funds or falsifying records for personal gain.

These figures only capture incidents formally reported to the Cifas Internal Fraud Database, meaning the true scale is almost certainly higher.

Many cases go unreported because organisations want to save face. What is clear, however, is that insider wrongdoing remains a serious and growing threat to businesses.

Under the Economic Crime & Corporate Transparency Act 2023, certain businesses can be found liable for fraud, regardless of involvement or awareness.

This offence, known as the Failure to Prevent (FTP) Fraud, currently only applies to large organisations that meet at least two of the following three criteria:

• More than 250 employees
• Annual turnover exceeding £36 million
• Total assets exceeding £18 million

Large organisations can avoid liability if they can show they took “reasonable steps” to prevent fraud. In practice, this means having clear systems in place to detect, deter and respond to fraudulent activity.

Fraud in the workplace is often carried out by people who understand how your systems work and where they’re weakest. Internal controls reduce those opportunities and create an environment where wrongdoing is difficult to hide.

Segregating duties is one of the simplest and most effective ways to build natural checks and balances into daily operations.

No one person should be responsible for every step in a key process; otherwise, they have the opportunity to both commit and then conceal fraud.

For example, no individual should be able to raise purchase orders, approve them and also process payments.

Every organisation needs to define who can authorise what and when. For example, only certain managers should be able to:

• Approve purchases or expenses
• Sign off new suppliers or contracts
• Authorise payroll or changes to employee details
• Grant access to financial or data systems

Without clear limits, people can make unauthorised decisions or take advantage of a situation when someone is off sick or on leave.

Ensure that everyone is aware of their own approval limits, who can step in when they’re away and how these handovers are documented.

Fraud often happens when someone changes payment details or processes transactions without proper checks. Always confirm requests for payments or bank detail changes through a trusted, separate channel – never rely on a single email or message.

Confirm with a colleague, check through a secure system and follow standard approval procedures. These steps help stop fraudulent requests and ensure that no one can redirect funds unnoticed.

Employees are often the first to notice when something inside the organisation doesn’t look right because they handle daily processes.

Some of the most common warning signs include:

• Colleagues who refuse to take holidays or insist on handling tasks alone
• Unexplained changes in lifestyle or spending patterns that don’t match a person’s role
• Missing documents, altered records or repeated “errors” that benefit one individual
• Staff overriding normal approval steps or rushing transactions through without explanation
• Resistance to audits, reviews or requests for supporting evidence
• Payments, refunds or supplier changes that occur outside standard procedures

These signs don’t prove fraud on their own, but they are risk factors that deserve attention. When workers are trained to recognise and report suspicious behaviour early, it strengthens the organisation’s defences and helps management act before real damage occurs.

Awareness alone is not enough. Staff also need to know exactly how to respond to suspected fraud and that they’ll be protected if they raise a concern.

Make sure everyone knows how to report something suspicious and that they’ll be shielded from retaliation.

Thank people who come forward and escalate their concerns promptly through the correct internal channel. Early reporting helps prevent small issues from becoming serious losses.

Fraud controls can weaken over time as teams, systems or suppliers change. Regularly review approval patterns, expense claims and other high-risk activities to make sure procedures are being followed.

Document what you check and record any actions you take. If something isn’t written down, it’s hard to prove it happened.

Training is one of the most effective ways to strengthen internal fraud controls. It not only helps employees recognise how fraud happens and what warning signs to look for, but also sets clear expectations for conduct.

Our CPD-certified Fraud Prevention Training course is designed for this purpose. It covers the common methods and warning signs of fraud, plus how to respond appropriately.

For all organisations,  the course helps reduce fraud risks that can cause lasting harm. For large organisations, it also offers evidence of taking reasonable steps to prevent fraud, as required under the Economic Crime & Corporate Transparency Act 2023.