Fraud is costing individuals and businesses in the UK £130bn each year, according to research published today.
The Financial Cost of Fraud Report, developed by national audit, tax, advisory and risk firm, Crowe, in conjunction with the Centre for Counter Fraud Studies at the University of Portsmouth, also reveals that fraud is costing the global economy £3.89trn, with losses rising by 56 per cent in the past decade.
Commenting, Crowe partner and national head of forensic services 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. Losses in 2018 averaged 7.15 per cent of expenditure, compared to 4.6 per cent in 2007.
“The figures quoted in the 2019 report are stark. For the UK, fraud losses equate to £130bn each year, while the global figure represents more than 80 per cent of the UK’s entire GDP.”
Nonetheless, the report also highlighted that, for many businesses, fraud is a problem that can be tackled.
It is estimated that, were organisations to correctly measure, manage and introduce procedures to reduce fraud, potential savings of up to £76bn could be made annually – a sum 57 per cent greater than the UK government spent on defence in 2018/19.
“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. Fraud is an ever present, high volume, low value problem and only a small proportion is detected. 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,” Gee concluded.
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