The Financial Cost of Fraud Report, developed by Crowe in conjunction with the Centre for Counter Fraud Studies at the University of Portsmouth, draws on more than 20 years’ extensive research across a range of industries, organisations and countries, to reveal the true scale of this problem.
Johnathan Dudley, managing partner at Crowe’s Midlands office in Oldbury, said: “In every sector of every country, fraud has a serious and detrimental impact on quality of life. At a time when Covid-19 has put strain on the quality of life, and financial wellbeing, of individuals and organisations alike, the importance of managing fraud losses has never been greater.”
Since the start of the coronavirus crisis, there has been a 19.8 per cent surge in fraud both directly related to the coronavirus and general economic-crisis driven fraud.
For many organisations, fraud is a problem that can be tackled. The report reveals that losses can be, and have been, reduced by up to 40 per cent within 12 months. It is estimated that, were organisations in the UK to correctly measure and introduce actions to reduce fraud, savings of up to £55 billion could be made annually. This sum is greater than the UK Government’s spend on defence in 2019-2020.
Mr Dudley said: “New and diverse threats have meant all business, from small and medium-sized enteprises here in the Midlands to huge multi-national conglomerates have suffered rising losses each year, and action to prevent, mitigate and combat fraud has not kept pace.
“Fraud needs to be viewed as a business cost. In almost every other area of business life, organisations know, measure and manage their costs. Fraud should be no different, particularly considering the numbers involved.
“The numbers are staggering, but may be hard to grasp. In the Midlands alone, the amount lost to fraud almost matches the net worth of Jaguar Land Rover, while the amount lost to fraud globally represents more than twice the UK’s entire GDP.”