What are the two fundamental activities effective fraud prevention involves?

Effective fraud prevention fundamentally relies on creating a culture of honesty and assessing fraud risks. A culture of honesty within an organization encourages ethical behavior and discourages fraudulent actions by promoting awareness and accountability. When employees understand the importance of integrity and are aware of the consequences of fraud, they are more likely to act honestly and report suspicious behavior.

Additionally, assessing fraud risks is a critical activity because it allows organizations to identify potential vulnerabilities within their operations. By understanding where fraud might occur—whether through inadequate internal controls, employee behaviors, or operational weaknesses—organizations can proactively implement measures to mitigate these risks. This assessment often involves a thorough evaluation of policies, procedures, and the overall organizational environment.

While the other choices may contribute to a business's success, they do not directly target the essential components necessary for effective fraud prevention. Creating a brand and marketing campaigns, establishing a sales force, and customer loyalty programs focus more on sales and customer engagement rather than fraud prevention. Similarly, training employees and implementing technology solutions are complementary strategies but lack the foundational element of fostering a culture of honesty which is pivotal in mitigating fraud risks at all levels.