Yigal Schwartzman, CPO & Co-Founder of eLoomina
Joe has always been a solid employee. Over the course of nine years, he has performed admirably, acquiring an impressive résumé of honed job skills. He has always felt that his enthusiasm and dedication to his employer was well-placed and reciprocated. But lately, Joe has been depressed about his employment situation.
Joe’s emotional slump started back in February, coming on suddenly like a fever with the outbreak of the Coronavirus pandemic. COVID-19 caused Joe’s employer to reduce employee presence at headquarters and most of its branch offices. Many of Joe’s co-workers were asked to take a leave of absence or formally let go. Joe still plods along at 75% workload – and pay – but he rarely comes to the office, frustratingly performing his workload from home.
Employee Commitment at Risk
COVID-19 has brought about a transformation in the ability of organizations to foster employee loyalty. Without warning, the trappings of employment have disappeared. For many workers, there are no physical offices or meetings to attend in person, causing them to suffer from a tangible lack of team contact. The organization has suddenly become a distant entity to which employees have lost their sense of commitment and belonging.
Commitment to work and dedication to the employer are influenced by many circumstances and Coronavirus has caused drastic negative changes in many of them: family pressure, financial stress, inability to go on vacation, loss of job security, truncated career development, lack of training, cancelation of bonus programs, and more.
After six months of partial separation and with no end in sight, Joe has begun to lose faith.
Storms Ahead
The Fraud Triangle establishes the three factors that, together, constitute the perfect storm for committing fraud— pressure, rationalization, and opportunity. The Association of Certified Fraud Examiners (ACFE), the world's largest anti-fraud organization, explains how the three factors are exacerbated during the current pandemic.
Joe is starting to exhibit symptoms of all three. Due to the unforeseen “Corona cutback”, the 25% drop in his pay is starting to put him under financial pressure. The mortgage and food bill are still as high as ever, but Joe isn’t taking home as much money anymore. Not knowing when the situation is going to improve can be a strong incentive for Joe to start thinking about how he can maintain his lifestyle.
Joe can easily rationalize some sort of exploit. After all, his employer has become somewhat disloyal in his eyes. “Considering all my dedicated work for so many years, why must I be worried about finding myself on the street in a bad job market?” Joe could justify making his employer pay for his current dissatisfaction.
Joe is very experienced and could discover fraud opportunities should he look around. The company has cut back on compliance oversight and internal audits. Layoffs have decimated the company’s comprehensive anti-fraud program. A seasoned employee like Joe could be tempted to take steps toward committing fraud.
Growing Potential for Internal Risk
Sudden, severe change can cause a toxic effect on employees who have already begun to waver in their commitment. Because of the scale, intensity, and speed of Corona-caused changes, many organizations were unable to properly manage the process of work-from-home. They did not communicate the reasons behind the steps they took nor weigh the risks involved and thus played into the hands of employees on the verge of rationalizing their reduced performance and commitment.
Like many of his co-workers, Joe is conducting a lot of work from his home computer with internet access to the company’s data center. Increased remote, unsupervised interaction with clients and suppliers might bring Joe increasingly into contact with external fraudsters and insider fraud prospects. He might be ripe for the picking.
Breakthrough Technology Reduces Internal Threats
Are companies just going to have to accept intensified, Corona-induced risk?
Not any longer. Technology can fill the void caused by staff reductions and remote work to assess the risk of insider threats and fraud.
Recent, breakthrough behavioral-analysis and Artificial Intelligence-based technology can provide companies with early insights into employee misbehavior and thus reduce internal risk. With the typical fraud scheme taking 18 months, there is plenty of time for these innovative solutions to notice that Joe’s behavior is changing suspiciously and to raise a red flag.
Advanced solutions like eLoomina make use of data that companies move, consume, and store, along with behavioral indicators, adaptive algorithms, Machine Learning, risk matrices and more to spot trends indicating internal risks and fraud potential. eLoomina considers a wide range of types of data produced by organizations that dynamically determine employees' aggregate behavioral variability over time, allowing for the emergence of risk patterns. Continuously and automatically comparing dozens of behavioral parameters identified in numerous organizations and behavioral studies, eLoomina can spot outlying employee behavior before damage is actually caused.
Companies must rapidly adopt advanced solutions to operate risk-free, especially in these Corona times.