Trust - The Hidden Risk

TRUST – THE HIDDEN RISK

Trust is prized by all employers and employees alike. It is often hard earned but once earned is difficult to lose. Such is the value placed upon trust that any employee convicted of an act of dishonesty in the Criminal Courts can expect tougher sentencing on the basis that his/her actions were a gross breach of trust.

There has been extensive coverage in the media recently surrounding alleged frauds committed on financial institutions using false valuations on property. It would be wrong to speculate on the outcome of current police investigations for obvious reasons but it does raise the question of the issues surrounding trust that, all too often, is taken for granted.

Understandably a lender will turn to an approved valuer where funds are to be lent against property. By the same token, the lender is going to need the comfort of a ‘name’ that he can trust and has previously demonstrated their performance. However, the danger is that too much credibility is given to the valuation, or indeed the reputation of the valuer. How often does the lender ‘dip sample’ the valuations? Why not, occasionally, obtain a second valuation from another valuer? I accept that there is a cost implication and that valuation fees on high value property can be expensive but in doing so you can benchmark performance, as well as avoiding the potential for fraud.

Whilst these comments clearly apply to the financial sector, the same principles can also apply to many other businesses where product or services are bought in. A Key Fraud Indicator is the existence of ‘cosy’ relationships with suppliers where suppliers always prefer to deal with certain members of the company. It is always advisable to test the relationship whether it is the product itself or comparison of prices with competitor suppliers. Likewise, through staff appraisal, it is always wise to test the performance of the employee, no matter at what level they sit in the organisation.

Don’t assume that everything is as it seems because to assume is to make an ass of u and me!