Two-thirds of businesses impacted by fraud

According to a global survey by PwC, fraudsters have targeted two-thirds of British companies in the past two years, with cyberattacks the most common crime.

In Britain, 64% of big corporations had been affected by fraud and other economic crimes over the period, 10% up on two years ago and significantly above the global average, which came in at 46%. However, the survey did find that reported incidents of bribery and corruption had fallen from 25% in 2020 to 10% while reports of accounting and financial statement fraud had also dipped from 26% of companies in 2020 to 10%.

Just under a third (32%) of British companies said they had suffered cyber breaches, making cybercrime the most frequent economic crime, but the trend was down compared with 42% in the 2020 survey. The report’s authors also warned that companies were increasingly vulnerable to making fraudulent ESG claims as they rushed to improve their “environment, social and governance” credentials.

Fran Marwood, Partner and Head of Digital & Forensic Investigations, said “With increased levels of disruption being experienced, and the fact that more UK organisations have experienced fraud than in our last survey, it’s surprising to see a decline in some types of fraud and economic crime, such as cybercrime, bribery and financial statement fraud.”

“From what we are seeing in the market, I believe some of the trends are temporary, with, for example, instances of fraud and misconduct potentially remaining undiscovered as traditional controls and corporate culture evolve to keep pace with remote working.”

“Encouragingly, in some cases, incidences of economic crimes have reduced due to the investment organisations have made in effective compliance programmes, cyber defences and fraud prevention controls.”

When looking at who is committing fraud, just over half of UK respondents (51%) said fraud was committed by external fraudsters, compared to 43% globally. The top three external perpetrators according to those asked in the UK were customers, hackers and vendors/suppliers.

Further findings revealed that the most serious fraud was initially detected most frequently by companies monitoring suspicious activity using forensic technology (15% of cases) and by internal audit according to 15% of respondents, followed by corporate security (12%) and whistleblowing or tip-off (10%). In terms of money lost through fraud, almost a quarter of respondents reported the figure to be between one million and five million US Dollars.

Marwood continued “The message to organisations is clear. With fraud now a greater and more costly threat than we’ve seen before, and the risk landscape continuing to undergo rapid change, it is important that organisations invest in prevention, and take the time to make sure their defences are match-fit for any attacks.  Organisations also need measures in place so they can act at pace when fraud happens to them. Failing to do so can end up with them  suffering the penalty.”