New figures show that the cost of fraud for both businesses and individuals in the UK has now reached a staggering £130 billion a year. Globally the cost has been calculated at £3.89 trillion.
The report, by risk advisors Crowe, said that while fraud awareness has improved among businesses their approach to the threat has not with many of them waiting to react to a problem instead of working to prevent it.
Crowe’s national head of forensic service, Jim Gee, said: “In the ten years since the first Financial Cost of Fraud report was published, the UK and global economy has suffered rising losses each year, owing to a multitude of new and diverse threats.
The figures quoted in the 2019 report are stark.
“Sadly, too many organisations adopt a reactive approach to fraud and only look to tackle it once it has taken place, and losses have already occurred. A change of perspective is needed.
The question is not if it is taking place, but at what level.
“We need to view fraud as a business cost. By understanding the nature and scale of the cost, we can reduce its extent, enhancing the profitability of companies and ensuring better funded public sector and charitable organisations.”
The firm suggested that if fraud were to be treated as a business cost up to £76 billion in savings could be made.
Analysis of their figures found scam artists were keen to exploit new technology and were targeting businesses for both professional and personal gain.
Overall cost to firms is between 3% and 6%, but some have suffered losses as high as 10% of their annual turnover.
Jim Gee added: “By understanding the nature and scale of the cost, we can reduce its extent, enhancing the profitability of companies and ensuring better funded public sector and charitable organisations.”
Peter Magliocco is a chartered financial planner working for a company which was targeted by fraudsters in the past and he urged members of staff to be vigilant and protect the interests of their customers.
He said: “It’s not unheard of for client email accounts to get hacked. Thankfully, we’ve managed to intercept these attempts where we’ve had fraudulent requests from clients to disinvest from funds.
“We’ll always call the client and ask if they have sent this email as well as be as careful as possible to protect client data.”