Fraud Risk : Understanding the Risk

Fraud risk and credit risk are two distinct yet interconnected concepts in the realm of financial services. While both terms relate to potential losses for institutions, they address different aspects of risk assessment. Credit risk is usually a matter of the clients affordability, while fraud risk speaks to whether the business will recover the funds or not.

Fraud Risk: Fraud risk pertains to the potential of individuals or entities engaging in deceptive activities to deceive and exploit financial institutions. It involves deliberate acts of misrepresentation, identity theft, or illicit transactions that can lead to financial losses, reputational damage, and regulatory non-compliance. Detecting and preventing fraud is crucial for maintaining the integrity of financial systems and protecting both institutions and their customers.