We know that tips are one of the best sources for detecting fraud and that hotlines are a great way to capture tips. If that’s the case, then why do companies often choose not to have hotlines? In victim organizations, the organizations with greater than 100 employees had hotlines in 74% of the cases, and for the smaller organizations, hotlines were only present in 25% of the cases. This is staggering because the implementation and management costs are minimal and the benefit of discovering fraud is huge.
Here are four reasons to implement a hotline within your organization:
- A hotline can enhance your organization’s tone at the top. If implemented and monitored properly, the hotline will send the message to employees and other third parties that the organization is supporting an ethical culture.
- Organizations with hotlines are almost twice as likely to detect fraud from a tip. We know tips are the best ways to detect fraud, and a hotline will increase your organization’s ability to capture tips.
- A hotline can cut the losses and duration of fraud in half. This is directly tied to an organization’s ability to capture tips more effectively. It blows my mind that there are business owners and executives who choose not to implement hotlines.
- With hotlines, organizations have the ability to capture information to proactively investigate possible wrongdoing. Being proactive allows management the ability to control the process, take appropriate action, which may include self-disclosure of any wrongdoing, if necessary. Without a hotline, employees and others may be more willing to go to the authorities or regulatory bodies to report possible wrongdoing. This will put the organization in a reactive situation with defensive posture, which creates more uncontrollable variables.
If you already have a hotline within your organization, then stay tuned for next week’s post because we will address some ways to make sure your hotline is effective.
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