Global Fraud Hits £3.2 Trillion

Global Fraud Hits £3.2 Trillion

Experts have urged organizations to focus more on fraud prevention after new figures were released revealing that doing so could add a staggering £44 billion to the UK economy.

Researchers at the University of Portsmouth’s Centre for Counter Fraud Studies teamed up once again with tax and advisory firm Crowe, Clark and Whitehill to produce The Financial Cost of Fraud 2018 report.

Once again, the findings are based on representative samples of items of expenditure in each organization and whether incorrect payments are the result of error or fraud. In total, it reviewed 600 loss measurement exercises related to £15.6 trillion of expenditure in 40 sectors globally.

Fraud is costing the global economy £3.2 trillion annually, and in the UK stands at £110bn.

Although this is a drop from last year’s estimate of £125bn, in some organizations losses can reach more than 10% of total expenditure, the report claimed.

Since 2008, there has been a massive rise of 49.5% in average losses, that amounts to 6.8% of total expenditure over the period.

Head of forensic and counter fraud at Crowe, Clark and Whitehill, Jim Gee,  told Infosecurity that the drop in fraud is simply a result of Sterling foreign exchange losses.

“Regarding cyber-fraud, this is one of the key drivers of this increase since 2007 and with increasing digitization, it is possible to perpetrate fraud on an industrial scale,” he added.

“The other three drivers of growth are: a decline in adherence to common moral and ethical norms; more and more transactions being undertaken by screen to screen, and fraudsters feeling more distant from and therefore less vulnerable to their victims; and the faster pace of business life meaning that ‘controls’ lag further and further behind.”

The findings come after other reports showed a continued uptick in cyber-driven fraud in the UK. Cifas claimed identity fraud jumped 1% last year, with cyber comprising 84% of the figure.

In addition, a PwC report from February revealed that almost half of UK organizations (49%) have suffered from cyber-related fraud in the past two years.

Crowe, Clark and Whitehill argued that visibility into the problem is a vital first step towards mitigating fraud risk.

“It is also the case that work to measure losses is highly cost-effective,” it said. “Efforts to reduce losses are helped by greater knowledge about the scale of the problem. The data shows that organizations which re-measure the same area of expenditure have consistently lower loss rates.”

Source: Information Security Magazine