Be Better Prepared for the Next Crisis: Through Robust Enterprise and Fraud Risk Management

Robust fraud risk management (FRM), as an integral part of enterprise risk management (ERM), lays the foundation. Since federal legislation requires both ERM and FRM, extensive standards, requirements, tools and leading practices exist for their application; but they call for greater management attention and accountability. Since fraud risks intensify in a crisis, prioritization of ERM and FRM is crucial to make sure governments use response funds as expected to achieve the outcomes intended. The Lines Between Fraud, Waste, and Abuse Can Be Blurry Federal agencies reported a record $277 billion3 (7% of annual spending) in improper payments for fiscal year (FY) 2021.4 An improper payment is defined by the Office of Management and Budget (OMB) as one which is "made in an incorrect amount under statutory contractual, administrative, or other legally applicable requirements/'5 In addition, the Government Accountability Office (GAO) reported that "the government still doesn't fully understand the size of federal improper payments, partly because it doesn't have complete, reliable, or accurate estimates." While CFOs and auditors must continue to perform crucial roles, program managers must own risk management.