In a transitional environment, characterized by physical distancing, remote workplaces, re‑opening of the economy and a fuzzy view of what’s coming next, a new collection of risks and challenges has emerged. Companies of every size are navigating the new landscape under extra stress, without the advantages of face-to-face communication, and the demands of a workforce that is hurting. It’s a challenge to keep workers safe, healthy, engaged, committed, and productive in this environment, and there will always be risks of corruption and misconduct. Investigating under these circumstances requires new approaches tools and techniques. Join Ken McCarthy, President of Integrity by McCarthy Inc, as he outlines the new risks posed by this environment, and the challenges and opportunities that will follow. The webinar will cover: Risks for misconduct in virtual and remote workplaces Opportunities for new and different kinds of misconduct Challenges of investigating in a transitional environment Post-pandemic investigations Examples of employees crossing the line How the fraud triangle helps us to detect and prevent misconduct in the new environment

1. “New” Misconduct
Challenges and Solutions for Investigating as We Move to a
New Normal
Ken McCarthy, President, Integrity By McCarthy Inc.
July 22, 2020

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3. Overview
• Current Environment
• Client Struggles
• Types of Misconduct
• Why People Commit Misconduct
• Risks
• Fraud Triangle
• Insider Threat
• Future Environment
• Anatomy of Misconduct
• Client Needs
• Need to Adapt
• New Misconduct
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4. What impact has the pandemic had on the volume of incidents or
investigations that you are involved in?
a. I am involved in fewer incidents or investigations than before.
b. I am involved in more incidents or investigations than before.
c. I am involved in the same number of incidents or
investigations as before.
d. Don’t know / Not Applicable.
Poll Question # 1
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5. How certain are you that there will be a need for workplace
investigations in the future?
a. I am absolutely certain.
b. I am somewhat certain.
c. I am worried about the future.
d. Don’t know / Not Applicable.
Poll Question # 2
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6. Let’s Go Back to March 11, 2020…
• Pandemic was officially declared
• Governments and employers responded
• Client needs changed
• Investigator workloads changed
• Landscape of complaints shifted
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7. Current Environment
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8. What Your Clients Are Struggling With
• Incidental support mechanisms and sounding boards
• Stress on stress
• Invisible misconduct
• Health and safety gaps
• Unattractiveness of the “new normal”
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9. Contributors to Present-Day Misconduct
• Weak or non-existent plans and policies
• Lack of presence and controls
• Maslow’s Hierarchy of Needs
• Grieving the loss of what used to be
• Exploitation and intensification
• Have’s and Have not’s
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10. COVID Misconduct
• Time and attendance fraud
• Neglect of duty
• Loss or compromise of assets or information
• Harassment
• Discrimination
• Psychological violence
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11. COVID Misconduct (continued)
• During video calls…
– Isolation
– COVID-19 appearance changes
– Inappropriate comments
– Unwelcome side-bar advances
– “Zoom-bombing”
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12. Why People Commit Misconduct
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13. Fraud Triangle and Misconduct
Fraud - “The use of one’s occupation for
personal enrichment through the
deliberate misuse or misapplication of the
organization’s resources or assets.”
Association of Certified Fraud Examiners
(ACFE)
Fraud simply put – “An intentional act to
secure an unfair or unlawful gain.”
Model can explain most misconduct
Trusted persons become trust violators when they conceive of themselves as having a financial problem which
is non-shareable, are aware this problem can be secretly resolved by violation of the position of financial trust,
and are able to apply to their own conduct in that situation verbalizations which enable them to adjust their
conceptions of themselves as trusted persons with their conceptions of themselves as users of the entrusted
funds or property.1
1Donald R. Cressey, Other People's Money (Montclair: Patterson Smith, 1973) p. 30.
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14. Fraud Triangle and Misconduct (continued)
Pressure
• COVID-19 pandemic.
• Medical bills.
• Expensive taste.
• Addiction.
• High personal debt or
credit.
• Greed and
Entitlement.
Opportunity
• Lack of controls,
monitoring and
oversight.
• Can move
undetected.
• Your position gives
you access and
authority.
Rationalization
• I don’t care.
• I need the money.
• It’s not hurting
anyone.
• The boss can afford
it.
• I have earned it.
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15. ACFE Report (June 2020)
“Fraud in the Wake of COVID-19:
Benchmarking Report”
• Present situation opens the door to
the increased pressure, opportunity
and rationalization that can lead to
fraud.
• As of May 2020, there had already
been an increase in fraud levels.
• There is an expectation of a
significant increase through to May
2021
• Greatest risk is cyberfraud (email
compromise, hacking, ransomware,
and malware)
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16. ACFE Report (continued)
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17. Insider Threat and Corruption
“An employee or a contractor will use his or her
authorized access, wittingly or unwittingly, to do
harm to the security of the United States.
(Department of Homeland Security)
“Any person with authorized access who causes
harm, intentionally or otherwise, to the assets of an
organization.” (Public Safety Canada)
• Personal crisis
• Unusual conduct
• Predisposing personality traits
• Cultivation and elicitation techniques
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18. So What?
How do we use the Fraud Triangle and Insider Threat Model?
• Risks and indicators
• Controls and gaps
• Prevention and reporting programs
• Training and awareness
• Insights and clues for lines of inquiry
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19. Future Environment
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20. Anatomy of Misconduct
Incident
Complaint
Filed
Day 0
Day 14 Day 45 Day 150 Day 180
Analysis and
Procurement
Investigation
and
Correction
Restoration
and
Restitution
Have you ever considered what happens outside of an investigation?
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21. Costs of Misconduct
(excluding the costs of any compromise
and costs to organizational reputation)
Extended sick leave
Productivity losses
People Factor
Management Hands - On
Legal and Professional Support
$0
$50
$100
$175
$250
$0
$50
$100
$150
$200
$250
$300
Incident Discovery Analysis and
Procurement
Investigation
and Correction
Restoration
Direct and Indirect Costs (000)
Direct and Indirect Costs (000)
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22. Your Clients’ Needs
• Needs have changed
• COVID costs money
• They don’t see what they don’t see
• External, internal and philosophical motivations
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23. “New Normal” Work Environment
• Continued remote and virtual work
• Small brick and mortar
• Collaborative hubs
• Health and Safety protocols
• Have’s and Have not’s
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24. Transitional & Post Pandemic
Investigations
• Discrimination and Harassment
• Physical and Psychological Violence
• Policy
• Fraud
• Insider threat and corruption
• Neglect of duty
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25. Transitional & Post Pandemic
Investigations (continued)
Ways that you will be interacting:
• Remote, virtual and protected
• New techniques
• Varying tools
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26. Transitional & Post Pandemic
Investigations (continued)
Evidence Sources:
• Devices
• Social media
• Third party and client data
• Witnesses
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27. Transitional & Post Pandemic
Investigations (continued)
Realities you will have to face:
• Credibility assessments
• Client missteps
• Accessing evidence
• Calm before the storm
• People are people
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28. What You Need to Do Right Now
If you are a Business Leader
1. Vulnerabilities
2. Unseen issues
3. Best investments
If you are a Human Resources Leader
1. Current risks and trends
2. Welfare manager model
3. Front-line leaders
If you are a Workplace Investigator
1. Client understanding
2. Process certainty
3. Adaptability
If you wish to discuss any part of the webinar, please contact me at
kenneth@integritybymccarthy.ca or through https://integritybymccarthy.ca
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29. Closing thoughts
• Our world has changed
• Your clients still need you, more than ever
• We have not yet seen everything that has happened in the past
months
• We will need to be adaptable moving forward
• We will be tackling areas that we had not explored before
If you wish to discuss any part of the webinar, please contact me at
kenneth@integritybymccarthy.ca or through https://integritybymccarthy.ca
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30. Thank-you for participating
Ken McCarthy
kenneth@integritybymccarthy.ca
@McCarthyk_PCI
https://www.linkedin.com/in/kenneth-mccarthy-pci/
Contact i-Sight
j.gerard@i-sight.com
Find more free webinars:
http://www.i-sight.com/resources/webinars
@isightsoftware
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