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British businesses are facing a fraud “epidemic” that is costing the UK £125 billion per year, new research shows.
Fraudsters have taken advantage of technology and corporate inaction and sent the total annual losses linked to fraud and error to record levels – up 43% since 2008. A report by tax and advisory firm Crowe Clark Whitehill and the University of Portsmouth’s Centre for Counter Fraud Studies found that those losses are now equivalent to 6.54% of UK business expenditure.
On a global basis, the financial cost of fraud now stands around £3.55 trillion – which is two thirds more than UK gross domestic product (GDP). Jim Gee, head of forensics and counter-fraud at Crowe Clark Whitehill, said: “Fraud is a pernicious problem which affects every area of society.
“Businesses are less financially stable and profitable, the quality of public services is diminished, and even charities do not get the full benefit of the donations which are made. “Organisations constantly analyse costs and seek to reduce them to the point of optimal efficiency, but fraud is being overlooked.”
Official statistics released in January showed that fraud and cyber crime now account for nearly half of all crime in the UK. However, proper fraud protection that cut losses by at least 40% would free up more than £50 billion each year for the UK economy, the report said. That is more than the UK Government spent on defence or education in 2016.
It said that organisations that pay greater attention to the problem are shown to have “consistently lower loss rates,” but those losses will persist without adequate scrutiny. Mr Gee added: “Organisations’ behaviour towards measuring and countering fraud can be the difference between a mediocre annual performance and stable growth. “Businesses can no longer afford to bury their heads in the sand.”
Author – www.belfasttelegraph.co.uk