For CFOs, making money last longer and go further is a daily challenge. Times of crisis show us that at any time, unplanned risks and unidentified threats can rattle services, supply chains, and market demand. The ongoing COVID-19 pandemic is impacting our societies in ways unprecedented in the post-WWII era. Despite governments’ best attempts at providing financial support and stimulus, public and private sector budgets are still under immense pressure. For decision-makers in public finance, the current fiscal landscape underscores the critical need for a prevention-focused approach to finance.
For most of us, prevention is a word naturally associated with healthcare. Prevention often brings to mind thoughts of behavior change, early screenings, and treatments designed to prevent poor health from arising in the first place. However, if applied in a comprehensive fiscal context, prevention reaches nearly every corner of the financial discipline. Put simply, a prevention-based finance strategy means a focus on investment – spending money up-front for greater returns in the future. Preventative spend can yield better value-for-money outcomes, and can put organizations in a better financial position. As a result, governments and service providers can use prevention as a tool to increase their financial resilience during times of economic crisis. But what does prevention look like when applied in a broader organizational context across other areas of public finance?
Practically speaking, by providing significant funding support for internal controls, digital systems, and adequate training for public sector staff, many instances of fraud can be prevented from happening in the first place. CIPFA’s recent public sector fraud research illustrates that 84% of local government professionals in the UK see prevention as the top priority for tackling future fraudulent activity. The research also showed that most public sector workers believe poor organizational controls and a lack of staff training make UK authorities vulnerable to external fraud. Prevention can be difficult to quantify, but public sector professionals in Britain tell us it’s key to stemming the illegal flow of public money from government.
Recent government responses and crisis funding packages for businesses, public services, and citizens mean there are more opportunities for fraudsters to exploit COVID-19 related hardship for personal gain. Governments and authorities without robust systems, processes, and qualified staff have an inherently higher risk of fraud. This risk can be even higher in times of crisis. A financial strategy that channels resources toward preventative counter-fraud measures stands to benefit other areas of the public sector, such as social care or policing. By identifying fraud risks, closing loopholes, and sharing information, taxpayer money can be used as intended: to help the most vulnerable in our communities.
Evaluating financial decisions through a prevention ‘lens’ is something each and every financial professional can do. Public sector examples show us that preventative strategies can generate better outcomes, increase financial resilience, and increase the capacity for public service providers. Stressful and uncertain times make it clear just how important sound public financial positions can be – and preventive finance is one strategic way of giving public service providers the best possible fiscal foundation for any unexpected storms that come their way.
Get The Best Financial Tips
Straight to your inbox
Subscribe to our mailing list and get interesting stuff and updates to your email inbox.
Thank you for subscribing.