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Fraud is costing businesses and individuals in the UK an estimated £130 billion each year, according to a research report, by the audit, tax, advisory and risk firm, Crowe, with the Centre for Counter Fraud Studies at the University of Portsmouth. It reckons that fraud is costing the global economy £3.89 trillion, with losses rising by 56 per cent in the past decade.
The report, first published in 2009, draws on over 20 years’ research, reviewing a total of 690 loss measurement exercises across a range of industries, expenditure, organisations and countries.
Jim Gee, Partner and National Head of Forensic Services at Crowe, 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 7.15pc of expenditure, compared to 4.6pc in 2007. The figures quoted in the 2019 report are stark. For the UK, fraud losses equate to £130 billion each year, while the global figure represents more than 80pc of the UK’s entire GDP.”
For many businesses, the report maintains, 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 £76 billion could be made annually – a sum 57pc greater than the UK Government spent on defence in 2018/19.
Jim Gee added: “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.”