scholarly journals Mitigating the Risk of Fraud in Documentary Letters of Credit

2016 ◽  
Vol 6 (1) ◽  
pp. 139-156 ◽  
Author(s):  
Hamed Alavi
Keyword(s):  
Risk Management ◽  
International Trade ◽  
Preventive Measures ◽  
Research Question ◽  
Management Theory ◽  
Main Method ◽  
Fraud Risk ◽  
Method Of Payment ◽  
Letters Of Credit ◽  
Fraud Risk Management

AbstractDespite the fact that documentary letters of credit (LC) are meant to facilitate the process of international trade, their specific characteristics may increase the risk of fraud while being used as the method of payment in the process of international transaction. Many factors like exclusive use of documents, geographical distance, absence of efficient prosecution, the diversity of legal system at the global level and restricted application of fraud rule can be considered as reasons for LC fraud. While billions of dollars are lost annually due to fraud in the course of LC operations, such vulnerability can result in reducing the global popularity of documentary letters of credit as the main method of payment used in international trade. Meanwhile, it is worth mentioning that fraud risk management is an unexplored territory in the practice of documentary letters of credit operation. Existing research tries to fill the gap in the study on comprehensive methods for mitigating fraud risk in operations with documentary letters of credit by using risk management theory in order to answer the question of how to manage fraud risk in LC transactions? In a quest to answer the research question, the paper is divided into two parts: the first part is dedicated to preventive measures while the latter explores responsive measures of an enterprise to manage fraud risk in LC transactions.

scholarly journals Risk Analysis in Documentary Letter of Credit Operation

2017 ◽  
Vol 0 (0) ◽  
Author(s):  
Hamed Alavi
Keyword(s):  
Risk Management ◽  
International Trade ◽  
Risk Analysis ◽  
Current Paper ◽  
Management Theory ◽  
Letter Of Credit ◽  
Legal Principles ◽  
Strict Compliance ◽  
Letters Of Credit

Abstract Documentary Letters of Credit are among most popular methods of payment used in international trade. They function as an irrevocable promise of issuing a bank to pay instead of an applicant buyer to a beneficiary seller under the condition that the beneficiary presents complying documents with terms and conditions of the credit to the bank. One of the reasons for the popularity of the LCs in international trade is shifting the payment risk from an individual buyer to a bank with a much stronger financial standing. However, LC operation in international trade is not free of risk. Despite the fact that two main principles of the Documentary Letter of Credit’s Operation (Principle of independence and principle of strict compliance) facilitate the process of international trade significantly, but still all parties involved in LC operation are supposed to be cautious about the existing risks relevant to their role in LC operation. Current paper tries to use legal principles of documentary credits and risk management theory in order to define existing risks to each party (beneficiary, applicant and bank) in international LC transaction and find an answer to the question of what are exposing risks for involved parties? For this purpose, the paper starts with an explanation of the two main principles of LC operation and moves forward with using the risk management theory to explain existing risks for each party in detail.

Fraud risk management: A small business perspective

2016 ◽  
Vol 59 (1) ◽  
pp. 13-18 ◽  
Author(s):  
Megan F. Hess ◽  
James H. Cottrell
Keyword(s):  
Risk Management ◽  
Small Business ◽  
Fraud Risk ◽  
Business Perspective ◽  
Fraud Risk Management

scholarly journals Fraud risk management in private healthcare in South Africa

2015 ◽  
Vol 13 (1) ◽  
pp. 868-878
Author(s):  
Gerhard Philip Maree Grebe
Keyword(s):  
Risk Management ◽  
South African ◽  
Management Practices ◽  
Primary Data ◽  
Healthcare Industry ◽  
The South ◽  
Private Hospitals ◽  
Fraud Risk ◽  
Fraud Risk Management ◽  
Management Staff

Worldwide, the healthcare industry aims to provide better health for all. However, fraud risk has become a threat to industries and organisations, including the healthcare industry. In the South African healthcare industry, it has been found that losses due to fraud risk amounted up to R8 billion per year. The purpose of this article was to explore the management of fraud risk within the South African private hospital industry and how this is managed. Primary data was collected by means of a survey, which involved management staff at head office level and at hospital level. The findings suggest that South African private hospitals could improve their current fraud risk management practices. By implementing the recommendations provided by the study, private hospitals will be able to manage fraud risk more effectively.

scholarly journals Whistleblowing as a Mechanism of Fraud Risk Management in Economic Practice

e-Finanse ◽  
2020 ◽  
Vol 16 (3) ◽  
pp. 96-105
Author(s):  
Agnieszka Skoczylas-Tworek
Keyword(s):  
Risk Management ◽  
Organizational Culture ◽  
Stock Exchange ◽  
External Factors ◽  
Personal Security ◽  
Fraud Risk ◽  
Economic Practice ◽  
Important Barrier ◽  
Fraud Risk Management ◽  
Internal And External Factors

Abstract The phenomenon of fraud and abuse remains relevant, as evidenced not only by studies published in this area, but also by the measures taken by economic operators to reduce it. Whistleblowing is an increasingly common tool for detecting fraudulent activities. It involves informing the organization’s management or external entities of any ethically, fraudulently or corruptly motivated irregularities. The level of interest in whistleblowing among Polish market entities is relatively low, mainly due to the lack of appropriate organizational culture, which is influenced by both internal and external factors within which the company operates. An important barrier in the implementation of whistleblowing in economic structures are both the ethical and sociological aspects and the low level of trust of potential whistleblowers towards their personal security for disclosing information about the signs of a prohibited act. Therefore, this tool is not very popular due to the lack of safeguards under national law, as well as internal regulations of entities using it. The aim of the publication is to verify the extent to which the whistleblowing tool is used to counteract the risk of abuse by economic entities listed on the Polish Stock Exchange, covered by the WIG 30 Index.

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