What is the first proactive fraud detection approach?

The first proactive fraud detection approach is installing reporting hotlines. This method encourages employees and stakeholders to report suspicious activities or potential fraud anonymously and without fear of retaliation. Hotlines create an environment where individuals feel empowered to disclose wrongdoing, which can often lead to the early detection of fraudulent behavior.

Effective fraud hotlines can serve as a crucial deterrent against dishonest actions, as they signal to all employees that the organization prioritizes integrity and accountability. This proactive step not only facilitates immediate reporting of concerns but also helps embed a culture of transparency and ethical conduct within the organization.

Other approaches, while important, follow in terms of primary proactive measures. Conducting win/loss analysis generally focuses on understanding business performance rather than directly engaging with potential fraud risks. Increasing employee raises is a strategy related to employee satisfaction and retention rather than fraud detection. Limiting employee access is a preventative control but it is often considered a reactionary measure to known risks rather than an initial proactive approach to uncovering fraud before it occurs.