Kick-Starting Fraud Risk Management At Small Businesses

Small businesses are significantly more likely than their larger counterparts to neglect instituting basic anti-fraud controls that can save them from costly losses, as inferred by responses to our India Fraud Survey, Edition II.

One of the common perceptions that small businesses tend to carry is that fraud risk management is a costly, time consuming activity, and hence best approached when the business reaches a certain size. This impression is also bolstered by the fact that the Companies Act, 2013 exempts small businesses from certain clauses pertaining to fraud risk management. However, in our experience, small businesses tend to lose more to fraud—monetarily (as a proportion of business revenues) as well as reputation wise—than large businesses. This makes it imperative for them to focus on building effective internal controls.