With fraud accounting for 40% of all crime in England and Wales, HR leaders need to take a pivotal role in countering both internal and external threats. From employees being exploited by criminals to insider threats and cyber attacks, the risks are escalating.
Research by fraud prevention service Cifas shows that 58% of large UK business decision-makers now view fraud and financial crime as a serious risk for their organisation, up from 49% in 2023. As hybrid working and digital transformation continue to reshape the workplace, so too must HR’s approach to fraud prevention.
One of the most alarming findings from the research is the growing concern at the direct targeting of employees by fraudsters. This is now ranked ahead of insider fraud, and highlights how critical it is for HR teams to protect not just the company, but the individuals within it.
Social engineering tactics, phishing emails, impersonation schemes and the exploitation of newer, less experienced employees are just some of the tactics used by cybercriminals. Employees with access to sensitive systems or financial data are especially vulnerable.
Spotting the signs of fraud in the workplace.
Read more: The devil is in the data: How HR can reduce fraud risk
To combat this, HR professionals need to be equipped to spot the behavioural red flags that could indicate either a compromised or dishonest employee. These signs might include staff avoiding annual leave (to prevent fraud detection), accessing data outside their remit, sharing passwords, or showing signs of financial distress or dissatisfaction with their role. These behaviours, while not always indicative of wrongdoing, should prompt further investigation when patterns emerge.
Understanding the fraud diamond model is essential for HR leaders developing preventative strategies. This model outlines four key factors that must align for fraud to occur:
- Incentive
- Opportunity
- Rationalisation
- Capability.
If an employee is under financial pressure (incentive), has access to weakly protected systems (opportunity), believes they deserve more (rationalisation), and has the skills to exploit those systems (capability), then the organisation is vulnerable.
Read more: How the wrong company culture fosters employee fraud
HR teams can play a vital role in preventing these conditions from emerging. For example, improving vetting processes across the employee lifecycle – beyond just onboarding – can help catch discrepancies in qualifications or background history. Regular risk assessments and internal audits are equally important in identifying vulnerabilities before they’re exploited. Crucially, clear and regularly updated workplace policies should reinforce that fraud and dishonesty will be met with serious consequences.
Confidential whistleblowing mechanisms are another essential defence. Employees are often the first to notice suspicious behaviour. If they’re given a safe and anonymous way to report concerns, the chances of intercepting fraudulent activity early increase dramatically. Likewise, HR should champion physical and digital security measures such as multi-factor authentication and access controls, especially for roles that involve handling sensitive data.
Upskill workforces to detect and report fraud before it escalates
The most powerful fraud prevention tool HR can offer is training. According to the Cifas study, 77% of businesses have already increased staff training budgets, suggesting many are recognising the importance of education in tackling fraud. Training doesn’t need to be time-intensive either; it should be engaging, bite-sized, and tailored to different roles. From recognising phishing emails to understanding data privacy responsibilities, employees can become an organisation’s first and strongest line of defence.
Read more: Are your anti-bribery and anti-fraud policies up to scratch?
Finally, HR must help cultivate a workplace culture that values transparency, ethics and vigilance. Fraud prevention isn’t solely a technical or compliance issue; it’s a human one. By fostering a supportive environment where employees feel secure, respected, and empowered to report wrongdoing, HR leaders can build long-term resilience. Through comprehensive, proactive measures – from policy to culture – HR has the unique capacity to protect both people and organisations from the growing tide of fraud.
By Rachael Tiffen is director of learning and public sector at the fraud prevention service, Cifas
