Fraud and economic crime is impacting companies more than ever

Fraud and economic crime is impacting companies more than ever according to PwC’s bi-annual survey of business crime.

According to the survey, 47 per cent of all companies have experienced fraud in the last two years. This is the second highest reported level in 20 years.

It is a common stereotype that it is committed by dedicated criminals, but it is increasingly a business’ own customers and staff.

Fraud committed by customers now accounts for 35 per cent of all crimes, up from 29 per cent.

The proportion of incidents with external and internal perpetrators were almost equal at 39 per cent and 37 per cent respectively. The remainder of cases involved a collusion between internal and external instigators.

The regions with the largest increases were the Middle East, where fraud and economic crime accounted for 47 per cent of all crime — up from 36 per cent previously, and North America, where it accounted for 41 per cent — up from 32 per cent previously.

Even the Asia Pacific region, which recorded the lowest rates, still reported 31 per cent.

Fraud — including tax fraud, antitrust, insider trading, money laundering and corruption — was a particularly significant money drainer for companies. Around 13 per cent of respondents reported that they had made losses exceeding $US50m ($76.3m).

The total cost of crimes reported in the survey was a staggering $US42bn.

Businesses becoming proactive

This increase in fraud and economic crime has forced companies to become more proactive. More than 60 per cent of organisations now employ advanced technologies such as AI and machine learning to fight crime.

But PwC global forensics leader Kristin Rivera warned that technology alone was not enough. She noted that many firms which resisted, struggled to see the value in deploying new technologies to protect themselves.

“Collecting the right data is just the first step,” Rivera said. “How the data is analysed is where companies will have an advantage when fighting fraud.

“Companies often fail to see the value in technology when they don’t invest in the right skills and expertise to manage it.”