A new study by professional services provider KPMG found that UK fraud reached £1.1 billion in the first half of 2011 – almost double its level of £609 million in the first half of 2010. It also has revealed that business fraud has exceeded £1 billion, with almost 50 percent of fraud occurring in the private sector.
Another significant statistic is that he average case value for private sector fraud now stands at £4.2 million, an increase from £2.5 million in the same period in 2010.
Although the study found that fraud was prevalent in larger organisations, small and medium sized companies are more likely to suffer dire consequences as a result. For SMEs fraud can often lead to significant cash flow problems resulting in redundancies – and at worst a fight for survival.
For any organisation the impact of fraud can be long lasting, affecting the organisation’s growth and competitiveness. It may dampen customer and staff confidence, cause reputational damage and hamper the day-to-day running the business.
Of particular interest to me is that management fraud averaged at £7.3 million per case and employee fraud at £708,000. A quarter of all fraud (£263 million) was committed against investors. This shows that, operating in positions of trust and authority, helping them conceal their tracks with greater ease – the more senior the employee the more damage they can inflict when acting fraudulently. Which is a problem if you are expecting anti-fraud and corruption programmes to be driven from the top down!
It is clear that more organisations need to take more notice of these statistics and look at putting in robust ant-fraud and, with the Bribery Act now in force, anti-corruption programmes. What is your organisation doing?
