International surveys are regularly carried out to estimate the true scale and cost of fraud to business and society. Findings vary, and it’s hard to get a full picture of how big the problem is, but all of these surveys show that fraud is common in organizations and remains a serious and expensive problem.
The risks of fraud will continue to increase as we see growing globalisation, more competitive markets, rapid developments in technology and periods of economic difficulty. Among other findings, the various surveys highlight that:
- Organizations may be losing as much as 7% of their annual turnover because of fraud.
- Corruption is estimated to cost the global economy about $1.5 trillion each year.
- Only a small percentage of losses from fraud are recovered by organisations.
- Fraudsters often work in the finance function.
- Fraud losses are not restricted to a particular sector or country.
- The prevalence of fraud is increasing in emerging markets.
Despite the serious risk that fraud presents to business, many insurance organisations still do not have formal systems and procedures in place to prevent, detect and respond to it. While no system is completely foolproof, there are steps that can be taken to align counter-fraud measures with customer experience in a digital world.