FRAUD RISK PREVENTION STRATEGIES AND FRAUD OCCURRENCE IN LARGE AND MEDIUM SIZED COMMERCIAL BANKS IN KENYA

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.