‘The first and worst of all frauds is to cheat one’s self…’ – Philip James Bailey
As some of us return to the office, many businesses are reviewing the traditional workspace model based upon their recent experiences of employees working from home.
The last two months have shone a light on the benefits of working from home, for both the welfare of their staff and productivity. However, before we all rejoice in the new work-life balance, and potential cost savings, let us consider the risks this new paradigm will expose our businesses to, financial fraud.
Heads I win, tails you lose!
Hedge fund managers have a tremendous responsibility of care for the assets in their possession. Not only in delivering returns, but more importantly, ensuring that their investors (and their own) assets are not spirited away by fraudsters.
The financial industry has been the primary target of financial criminal activity, and hedge fund managers are high on the hit list. There are numerous avenues these criminals will attempt to separate managers from their clients’ money. From the obvious spam to sophisticated multi-level approach, attacks are constant.
I have personally consulted for two enterprises which were targeted by very sophisticated schemes. Fortunately, on both occasions no assets were lost. The one element each of these schemes had in common was that the criminals leveraged off a knowledge that those with the authority over financial transactions were out of the office.
For any hedge fund manager looking to adopt permanent remote working, it is essential that their processes are adapted to take the new risks this will create into consideration.
Firstly, Policies & Procedures: These must be reviewed and revised, and most importantly implemented. The multi-tier approval processes, pre-determined beneficiaries and their SSI’s and communication channels must all come under the microscope.
Secondly, Cyber Security: Any information that a perpetrator of crime can access will give them leverage. Information as simple as email address and telephone numbers can be enough, let alone access to historical emails and documentation.
Thirdly, Technology: Implementing a technology overlay to any process ensures operation channels are adhered to, with the added benefit of an audit trail.
Finally, Diligence: The last defence to any fraud are those individuals involved in a transaction. All parties must be retrained in the new process and associated risks.
Quay Partners has many years of experience of remote working. We know the risks are real, but we also know there is a solution. Stay safe and stay alert!
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To learn how Quay Partners can guide your business to success, contact us for more information.
Quay Partners Group delivers bespoke investment management solutions to independent hedge fund managers and family offices.
Thomas Underwood, the Founder, has over 20 years’ experience in managing and operating hedge funds.