SOC 2 CC3.3: COSO Principle 8: Assesses Fraud Risk

Build fraud risk assessment into your overall risk assessment process as a distinct component. Create a template that covers fraud types relevant to your organisation, the areas most vulnerable to fraud, the roles with the greatest opportunity, and the incentives or pressures that could motivate it. Identify fraud scenarios specific to your environment. For a technology company, think about manipulation of financial data, theft of intellectual property, misuse of customer data, unauthorised production access, tampering with audit logs to cover tracks, and social engineering targeting privileged users. Address management override risk head-on. This is unique because management has the authority to bypass controls. Consider scenarios where leaders could override access controls, approve inappropriate exceptions, suppress incident reports, or manipulate system configurations. Design controls that provide independent verification of management actions. Put anti-fraud controls in place based on your findings. Segregation of duties prevents any one person from controlling an entire process. Monitoring and alerting catch anomalous behaviour. Independent review and approval processes cover sensitive operations. A whistleblower mechanism gives people a safe way to report concerns. Revisit the fraud risk assessment at least annually, and also when the organisational structure, business processes, or technology environment changes significantly - or when fraud incidents occur at your organisation or peers. Pull in stakeholders from finance, legal, HR, and operations alongside IT and security. Document everything: identified fraud scenarios, their risk ratings, and the controls designed to prevent and detect each type. Present findings to management and the board for review and sign-off.