Abstract:
Operational risk is one of the serious challenges facing financial sectors globally. This study
sought to investigate the effect of fraud risk prevention strategies on fraud occurrence among
large and medium-sized commercial banks in Kenya. The study adopted a descriptive survey
design. The target population was 57 managers of seven large and twelve medium sized
commercial in Kenya. A questionnaire was used to collect primary data. Analysis was done
using SPSS software Version 20. Ordinary Logistic regression was used to evaluate the
relationship between the regressor and fraud occurrence. The study findings revealed that fraud
risk prevention strategies reduce the fraud occurrence in commercial banks in Kenya
significantly. In addition, referencing of documents of value, segregation of duties, wealth
declaration & investments, control over dormant accounts, integrity check on hiring, verification
of signatures, Job rotation within branch, staff training on hiring and cross referencing of
documents were aspects of fraud risk prevention methods found to be commonly used to address fraud occurrence among large and medium-size commercial banks in Kenya. The study
recommends that commercial banks should continuously evaluate the effectiveness of the various
strategies that commercial banks should adopt in order to control fraud occurrence.
