South Africa’s economy stands on the pillars of industries like mining and construction, crucial contributors to its prosperity. However, their significance also makes them appealing targets for cybercriminals. Fraud and corruption are ever-looming threats that demand immediate attention, and companies operating in these sectors must be proactive in their efforts to combat this menace.
The mining industry, in particular, ranks among the most vulnerable sectors to fraud, leading to substantial revenue losses. PwC’s Global Economic Crime and Fraud Survey 2022 unveiled alarming statistics, indicating that 51% of organizations have experienced economic crimes like fraud and corruption in the past 24 months. As CFOs and executives grapple with this evolving landscape of fraud, it is essential to adopt comprehensive strategies to safeguard their companies and maintain financial stability.
Ryan Mer, the CEO of eftsure Africa, a Know Your Payee™ (KYP) platform provider, highlights the pressing need for vigilance and adaptability. He emphasizes that payment fraud, supplier fraud, and tender-related fraud pose significant risks to the mining and construction sectors in South Africa. Mer shares valuable insights and actionable tips to strengthen defenses against fraudulent activities in these industries.
Never neglect background checks
First and foremost, background checks on suppliers are non-negotiable. Mining and construction companies must carry out thorough screenings to ensure the credibility of their suppliers. Compliance with South Africa’s Mining Charter, which promotes inclusive procurement and supplier development, necessitates meticulous recording and reporting of these checks. Scrutinizing supplier directors, identifying politically exposed persons (PEPs) and sanctions, and establishing links between directors and employees are essential components of the verification process.
For companies dealing with international suppliers, verifying foreign supplier information may present challenges. However, they can leverage onboarding platforms and automated verification processes for local suppliers to enhance efficiency and reduce payment fraud risks. Comprehensive background checks not only ensure compliance but also help identify potential risks, thereby minimizing the likelihood of fraudulent activities.
Collaborate to reduce costs
Collaborative efforts can also play a pivotal role in cost reduction and improving fraud prevention. Mining and construction businesses can partner with specialized companies that offer extensive reports containing crucial supplier credibility information. To strike a balance between the costs of these verification reports and competitive pricing structures, collaborative contracts or integrated pricing solutions can be negotiated.
Employee training remains a critical aspect of fraud prevention. While digital security measures are essential, fraudsters are increasingly targeting people to bypass these defenses. Therefore, regular training updates are necessary to keep employees aware of the latest fraud trends and security protocols.
Keep training up to date
Automation is a valuable tool in minimizing risks associated with manual processes. However, it is essential to take the next step and integrate automated systems seamlessly. By adopting a Software as a Service (SaaS) solution, like eftsure, companies can enhance their processes and limit payment fraud risks. This integrated onboarding, verified master data management, and payment screening solution cross-reference payments with a verified bank account database, alerting organizations to potentially compromised payment details before the release of funds.
Insure, in case
Despite implementing robust preventive measures, companies should also consider fidelity insurance to mitigate the risks of becoming victims of fraud. Fidelity insurance protects against losses resulting from fraud or theft by an employee and serves as a safety net for businesses in dire circumstances. Ensuring mechanisms for checking and controlling accounting and business processes is a fundamental requirement for fidelity insurance policies.
In conclusion, safeguarding South Africa’s mining and construction industries from fraud demands a multi-faceted approach. Extensive background checks, collaborative partnerships, up-to-date training, and integrated automation are crucial in mitigating risks. Additionally, fidelity insurance acts as a safety net to cover losses that may still occur despite preventive measures. Embracing these measures will not only prevent losses but also reduce fidelity insurance premiums and safeguard businesses against potential threats, ensuring the long-term prosperity of these essential industries.
Ryan Mer, the CEO of eftsure Africa,
