Jessica Fino 22 Feb 2018 02:19pm

Half of UK businesses are victims of fraud

Half of UK businesses have been hit by fraud over the last two years, with nearly a quarter (24%) suffering losses of more than $1m (£720,000)

According to PwC’s global economic crime and fraud survey, 51% of the most disruptive crimes result in losses over $100,000 (£72,000).

However, only half of the 146 UK businesses that took part in the survey said they have carried out a fraud risk assessment in the last two years.

In total, PwC interviewed 7,000 businesses across 123 countries.

Cybercrime was the most common crime, affecting 49% of economic crime victims in the UK, compared to 31% globally. This type of fraud has overtaken asset theft as the top crime for the first time.

The report said that 16% of fraud is uncovered by tip-offs or whistleblowers, and 15% by internal audit. The most common method is general anti-fraud controls (19%).

The majority of fraud (55%) was committed by external actors such as hackers, compared to 40% globally.

There was also a sharp increase in bribery and corruption from 6% in 2016 to 23% this year.

Still, companies are now spending more money in compliance than ever before, with 54% of businesses increasing their budget.

According to a report produced by BDO earlier this year, the value of fraud in the UK has risen by 538% in the last 15 years, reaching a total of £2.11bn in 2017.

The number of reported fraud cases also increased by 172% to 577, while the average value of fraud has also risen by 133% to £3.66m, compared to £1.5m in 2003.

Fran Marwood, forensics partner at PwC, said, “The cost of fraud to UK business continues to rise, due in part to the increasing threat from cyber fraud. Whilst the direct losses are quantifiable, the wider effects can be far more damaging. UK organisations told us that the cost and disruption of sorting out the aftermath, as well as the effect on employee morale, business relations, and brand are big hidden costs.

“In this current period of rapid business change, understanding the risks and possible avenues for attack is more crucial than ever.”

Globally, 49% of organisations said they have been victims of fraud and economic crime, with 64% of the fraud damage reaching $1m (£1.4m). Moreover, 52% of all frauds are perpetrated by people inside the organisation.