Big business is losing out to fraudsters, with over EURO3.6bn lost in the last two years, according to a recent European study published by PricewaterhouseCoopers. This claims that at least 43% of major European companies have fallen victim to fraud during this time and a third of all companies believe that they are at greater risk of fraud today than five years ago.
The loss is compounded by the fact that only one in five companies who fell victim recovered more than half of their lost assets, and over half the companies surveyed are not insured against fraud. It says that companies and organisations are most concerned about cybercrime, identifying this as the top fraud risk of the future. Of those companies that had been a victim of economic crimes, 13% stated that cybercrime was one of them.
Other key findings include:
- frauds committed by individuals within the organisation are more common than frauds perpetrated externally
- most frauds are only detected by accident, revealing the inadequacy of many company control systems in highlighting and detecting fraud
- fraud rates are higher in Western Europe than Central Europe, although this may be explained by varying levels of fraud awareness, and by differing priorities in corporate governance, and attitudes fraud prevention
- while almost 50% of organisations have a policy to report all economic crime to the authorities, only 38% have actually pressed charges .
Five key steps to identify and tackle fraud-related risks suggested by PricewaterhouseCoopers are:
- assessment of existing and future fraud vulnerabilities
- proactive monitoring of fraud risks with clear policies to encourage and protect whistleblowers
- effective personnel policies to facilitate internal investigations
- a robust fraud response plan
- communications to all stakeholders on the company's stance on fraud.
