Effective fraud risk assessment should identify what types of fraud an organization is most susceptible to, where inside or outside the organization it could occur, and how it might be perpetrated. These fraud risks should then be prioritized based on their significance and likelihood.

A common way to assess fraud risk is to survey staff across an organization to gauge their perceptions about the likelihood of fraud. When you ask employees to rank likelihood and impact on a five-point scale, you'll get back specific numbers from them.

One of the most effective ways to combat employee fraud involves raising the "perception of detection," which is an employee's belief that if they commit fraud, someone within the business will uncover their criminal activity quickly.

between risk level and the perception of the auditor’s ability to detect fraud. We also examine how perceptions of risk may change in response to the number of risk factors present.