The term refers to illicit activities perpetrated by individuals within an organization against the organization itself. Such actions are undertaken to enrich the perpetrator, directly or indirectly, or to cause financial or operational detriment to the employer. Examples include asset misappropriation, such as theft of cash or inventory; fraudulent financial reporting, where employees manipulate accounting records; and corruption, which involves bribery or conflicts of interest.
Understanding this phenomenon is vital for protecting organizational assets and maintaining financial stability. The costs associated with these acts can be significant, impacting profitability, shareholder value, and reputation. Historically, weaknesses in internal controls have provided opportunities for this type of malfeasance to occur. Strong governance and robust oversight mechanisms are essential for mitigating risk and deterring potential offenders.
