Commercial Insights
How to protect your business from occupational fraud

Article 7 min read Updated March 11, 2026

While it’s important to focus on the threat of fraud from outside your organization, it’s equally important to prevent internal threats.

It’s a risk that organizations may underestimate. After all, nobody likes to consider the possibility of fraud within the organization. However, misplaced trust creates can prove costly to your company’s financial wellbeing.

Occupational fraud—often referred to as internal or employee fraud—remains one of the most persistent organizational risks. According to The Association of Certified Fraud Examiners (ACFE), organizations lose roughly 5 percent of annual revenue to fraud. Further, median losses total nearly $145,000 per case with schemes lasting roughly one year before detection.

What are the factors?

According to Jeff Taylor, Head of Commercial Fraud Forensics at Regions Bank, smaller and mid-sized organizations face the highest risk. Lean staffing, overlapping responsibilities, and limited internal oversight all combine to create ideal conditions for theft.

“Leadership teams must juggle growth, operational demands, and staffing limitations daily,” said Taylor. “Those competing priorities can create blind spots—especially when it comes to segregation of duties, monitoring, and system access.”

Once fraud takes place, it’s hard to recoup the losses. According to the ACFE, recovery of stolen funds remains low—only about 11 percent of organizations recover three‑quarters or more of losses.

“Recovery is not a strategy,” Taylor says. “Once assets leave the organization, full restitution becomes unlikely."

That makes eliminating temptation and opportunity one of the most effective ways to safeguard your assets.

What forms does occupational fraud take?

Internal fraud activity falls into three major categories:

Asset misappropriation — The theft or misuse of an organization’s cash, property, or other resources
Corruption — An employee’s abuse of authority in business transactions for personal gain
Financial statement fraud — The manipulation of financial records to misstate financial performance

The antidote? By implementing the right controls, it’s entirely possible to reduce or even eliminate fraud exposure without slowing down the cadence of the business. The key is to ensure that fraud becomes difficult to initiate and easier and faster to detect.

“Asset theft grabs the most attention, but corruption and financial-reporting misconduct often are responsible for the highest losses,” Taylor notes. “Controls must target these high-risk processes—procurement, vendor management, and financial close.”

What are the warning signs?

It begins with understanding some of the key factors in occupational fraud:

Opportunity: How easy is it to steal without being noticed?
Pressure or motivation: Does the individual have pressure, whether psychological or financial, such as heavy debt or addiction?
Rationalization: The individual finds ways to justify their actions, either through a resentment over pay, or the belief that he or she will repay the money in a few weeks.

In the workplace, the first thing to look for are behavioral changes. For example, if an employee lives beyond his or her means, faces financial strain, or suddenly exhibits unusually close relationships with vendors or customers, those can prove important early-warning indicators.

At the same time, it’s important to take note of other patterns on the job. For example, a case of fraud over months or years requires ongoing maintenance. That means an employee will likely be reluctant to take time off from the job for fear of discovery.

Another clue? If an employee is especially resistant to sharing information or duties with other employees, keeps unusual hours at the office, or resists new procedures or internal controls.

“The signals rarely appear in isolation,” Taylor says. “This is especially true when behavior shifts coincide with increased access to key systems. That’s when an organization should take a closer look.”

What steps can a business take?

It’s all about implementing controls, those systems that help eliminate opportunity and create a culture of heightened vigilance. The good news is that many of these controls are relatively simple and easy to put into place.

Harden internal controls by enforcing segregation of duties, dual approvals, privileged-access limits, and system alerts. Further, minimize override disks. According to the ACFE, 20% of internal fraud cases at companies with more than 100 employees were caused by overriding existing internal controls.
Strengthen whistleblower and reporting programs—still the most effective detection method.
Improve hiring and identity verification.
Whenever possible, use automated monitoring and analytics to reduce manual review processes.
Conduct regular, structured fraud‑risk assessments tied to process changes and system updates.
Expand training and awareness programs for employees and managers.
Prioritize oversight of high‑risk roles, such as executives and those with broad financial or system access.
Tighten procurement and payables controls with vendor due diligence, conflict-of-interest reviews, and exception analytics.
Support internal investigation functions with proper staffing, tools, and independence.
Track leading indicators—override attempts, access changes, manual journal spikes, vendor file edits, and hotline activity—to support early detection.

In short, one of the most effective ways to reduce occupational fraud is to eliminate the opportunity for it to take place. By maintaining a culture of awareness and creating the systems to monitor and verify, it’s possible to help protect against fraud.