What Steps Should You Take When Suspecting Fraud In Your Startup?

As an entrepreneur, you need to micro-manage numerous tasks to ensure smoother operations and business success. Hiring employees or working with partners is a great idea to facilitate your work. It will ensure that you can focus on the company’s prime objective. At the same time, your staff or partner manages everyday tasks. It will eventually elevate the business success rate. 

But, even after taking appropriate steps, if your profits are declining or the quality of product or service is being compromised, it is a matter of grave concern. According to a recent study, in such scenarios, the chances of your business being vulnerable to fraud increases significantly. 

If you suspect fraud in your startup, continue reading this article to learn preventive measures. 

What Are The Different Types Of Frauds?

In the early stages of business, they are vulnerable to the three types of fraud:

  • Cyber Attacks: According to statistics, small firms and startups are the prime targets of 43% of cyber attacks. It can cause a loss of approximately $2.2 million a year. Furthermore, there are 60% chances of business failure after a cyberattack. That’s the reason why it is essential that you protect your business by elevating your network and database security. 
  • Social Engineering or Imposter Scam: Social engineering scam is a criminal activity to mislead the business owner to avail financial benefits or confidential information. Voice phishing is one of the most common practices followed by scammers. According to a survey, almost 33% of the data breach cases are due to social engineering scams. That’s why practicing due diligence is a must for entrepreneurs. 
  • Employee Fraud: Did you know that approximately 30% of bankruptcies are due to employee theft? Yes, you read it correctly! Moreover, in a survey, 75% of employees admit to stealing from their organization at least once. Such cases make it challenging for businesses to protect themselves. Even so, it would be best if you took appropriate measures to mitigate the employee theft risk. 

How To Protect Your Startup?

Now that you know the common types of fraud let’s learn about the measures to protect the organization. 

Get In-Depth Of The Fraud By Using Ethical Hacking 

If you suspect an employee or imposter scam, it is wise to pay attention to the online activities of your employee or partners. One way to do so is by taking the help of ethical hacking. It is essential if you already have an idea who the imposter could be but do not have solid proof.

To put it simply, you can hire a hacker for services such as cell phone or social media hacking. The professionals can provide you with a suitable solution or information as per your requirements. When you have accurate information and proof, you can use it to safeguard your business. 

Take Cybersecurity Measures To Mitigate The Risk Of Attacks

To protect your organization from cyber attacks, you should use a firewall. Encrypt every information that you are sharing and set strong passwords. In addition to this, you should create backups of crucial information and use cloud storage to keep the data protected. You can also create new policies to control the physical access of company devices and control unauthorized access. 

Create Easy To Understand Agreements With Partners

Using jargon or legal language can make agreements challenging to understand. It can create confusion and conflicts between partners, threatening the business. To be more specific, complicated contracts increase the chances of breach of control.

Therefore, it is essential that you carefully create the agreements. Define the roles and responsibilities of the partners properly, and don’t forget to include confidentiality clauses. Believe it or not, this simple step can help protect your startup. 

Train Your Employees To Detect Suspicious Activity Right Away

Last but not least, you should educate your employees about cyber threats and other potential risks. Limit the number of employees who can access company information. This permission should only be given to those employees whom you trust completely.

Nevertheless, it is essential that you do background checks of every employee before you hire them. It will help build mutual trust and understanding between the employees and the company. 

To Sum It All Up!

The prime motive of every startup is to earn profits. So, the majority of the steps are taken to elevate sales and promote business. Knowingly or unknowingly, entrepreneurs neglect the importance of business security, making it vulnerable to fraud. Fortunately, with the measures mentioned above, you can protect your business and ensure its safe growth.

Author Bio: John is a technical content writer with Submit Core for more than 5 years now. His expertise with all things technology has bagged him several accolades from popular tech magazines globally.

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