Toby Braun, Founder & Managing Partner, American Special Investigative Group.
When it comes to fraud prevention, most companies rush to invest in software, threat detection systems, audit automation tools, access controls, etc. The truth is, fraud prevention isn’t a technology issue; it’s a leadership issue.
It’s easy to blame failed systems after an incident, but in our consulting work, we’ve noticed that the root causes of fraud almost always point back to decisions made at the top. Vague communication, weak policies, lack of training and inconsistent enforcement all create fertile ground for internal fraud to grow, regardless of how sophisticated your tech stack may be.
Here’s what leaders need to understand.
Technology Detects, Leadership Prevents
A fraud detection system can alert you after something suspicious happens. But strong leadership has the power to create an environment where those events are far less likely to occur in the first place. Technology detects, leadership prevents. A healthy, transparent and ethically grounded culture is the most effective fraud prevention strategy there is. And culture doesn’t come from a dashboard, it comes from the top.
Communicate clearly and frequently.
Poor communication, for example, creates blind spots. When policies are poorly communicated, or worse, nonexistent, employees fill in the gaps. That uncertainty creates ambiguity, and ambiguity is where fraud thrives. Clear, frequent communication about expectations, reporting procedures and accountability isn’t just good management, it’s essential. Employees shouldn’t have to guess what “doing the right thing” looks like.
Build in safeguards.
Similarly, weak internal controls are often mistaken as a budget issue, when they’re really a leadership failure. It’s not uncommon for companies to say, “We didn’t have time to set up those controls.” Or “We trust our people.” But internal controls, like segregation of duties, dual approvals or rotating high-risk job functions, don’t signal distrust. They signal discipline. Strong leaders don’t wait for fraud to happen. They build in safeguards that ensure no single person has unchecked access or authority.
Provide consistent training.
Training isn’t a checkbox. Leaders who treat fraud training as a one-time compliance task are missing a critical opportunity to shape behavior and reinforce values. Real training connects the dots between individual actions and organizational risk. It promotes ethical decision-making and encourages accountability across the board. The best programs are ongoing, scenario-based and aligned with the company’s mission, not just a quick slideshow during onboarding.
Enforce accountability throughout the organization.
At the core of all of this is accountability. And accountability starts at the top. Fraud prevention isn’t just about catching someone else, it’s about holding yourself and your leadership team to the highest standards. If senior leadership cuts corners, tolerates unethical behavior or avoids scrutiny, that tone filters down. Employees often mirror what they see. Whether it’s integrity or indifference, the tone at the top becomes the standard for the entire organization.
Too often, leaders believe they’ve done enough by purchasing the latest fraud prevention software. But fraud is not just an accounting issue. It’s not an IT problem. It’s a leadership responsibility.
If you want to prevent fraud, don’t just upgrade your systems. Upgrade your leadership. Lead with intention, enforce standards consistently, and create a culture where fraud has no room to grow. When you do that, fraud prevention stops being a line item in your budget and becomes part of who you are as a company.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
Read the full article here
