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Fraud: A continuing threat with climbing costs
Duration: 00:02:14
Fraud continues to hit record highs—impacting more companies in more diverse ways than ever. Well over half of US companies 56% told us they had experienced fraud in the past 24 months. Customer fraud, cybercrime and accounting fraud are the top three types of fraud reported.
Share of fraud by external parties remains unchanged at 49%, while the share of fraud by internal actors has decreased. Business partners remain a serious risk—more than 4 in 10 cite vendors and suppliers, agents, consultants, shared service providers and other business partners as the source of their most disruptive external fraud.
Three in ten US companies said that their most disruptive fraud highlighted a need for new technologies. Yet many are struggling to see the value, trust the effectiveness—or sometimes even understand—the new technologies they are contemplating. Only 25% of respondents strongly agree that they’ve been able to implement new or upgrade existing technology—citing issues of cost, limited resources and disparate data as obstacles.
Two out of five US companies don’t have formal or documented policies and procedures for their overall fraud program, a huge area for improvement. And when fraud hits? Surprisingly, 50% of US companies did not conduct an investigation after the last major fraud. And barely one-third reported it to their board.
Three steps to combat fraud
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Taking action: being prepared
Are you doing enough? Barely half of the organizations in our survey allocate dedicated resources to fraud risk assessment, governance and managing third parties. To raise your game in preventing fraud, you should focus on three actions:
First, identify, rank and address all your risks. Second, back up your anti-fraud technology with the right governance, expertise and monitoring. And third, take notice of fraud when it happens.
Responding: doing the right thing
When your organization is hit by fraud, how do you respond? Of the companies in our study, 50% said they didn’t conduct an investigation. Getting to the root of the problem is key to preventing further damage. You may elect to get external assistance to investigate. Disclosing to government authorities is also crucial.
Responding: doing the right thing
Emerging stronger: measuring success
Nearly half of US respondents plan to increase their spend on fraud prevention in the next two years. But will they see a return on their investment? The answer is probably yes: our research reveals a clear link between fraud prevention investments made up front—and reduced cost when a fraud strikes. Our survey found that companies with a dedicated fraud program in place spent 27% less on response and 55% less on remediation costs than those without measures in place.
Emerging stronger: measuring success
Emerging stronger: measuring success
Emerging stronger: measuring success
Emerging stronger: measuring success
“When it comes to preventing and tackling fraud, our research shows that a dollar invested now is worth twice as much when a fraud hits.”
