We?ve long been saying that occupational fraud is one of the most ruthless universal problems that businesses are facing these days. This is because it is pervasive, does not discriminate, and does not recognize borders. More so, occupational fraud usually goes on unnoticed for an average of around 18 months, leaving fraudsters more than enough time to cause real financial damage.
Fraud usually occurs in the shadows, and operates in a disguised manner. Fraud also affects corporations and organizations big and small but sadly, big businesses often fall into false thinking and believe that they are safe and prepared against fraud although they really are not.
There?s a saying that in Knowledge, There is Power; and that can?t be more true than in understanding fraud. Fighting potential threats means having access and understanding of the most up-to-date statistical data to help with fraud detection. The important fraud statistics you should know about are listed below:
Do you know that 22% of fraud cases worldwide equals a loss of at least a million dollars? The median global loss is at $145,000 per case which could explain why and how organizations report losing around 5% of their revenue to fraud. This is certainly not a small number, because this means global loss to fraud is at $3.7 trillion USD (yes, that?s trillion!).
3 Most Common Types of Fraud
Arranged from most common are: asset misappropriations, financial statement fraud, and corruption; however financial statement fraud causes the greatest financial impact.
Whistleblower Detection Rate
40% of all fraud cases were detected because of a tip and organizations with a fraud hotline report losing 41% less than those who do no not and are able to detect fraud 50% quicker.
Most Affected Industries
Manufacturing, government, public administration, financial services, and banking industries report the greatest number of fraud cases.
Most Affected Organization Departments
77% of fraud that happens within corporations occurs in operations, accounting, customer service, executive/upper management, sales, finance, and purchasing departments.
Effect on Smaller Organizations
Proportionally speaking, the losses are much greater at smaller organizations than larger corporations.
Anti-Fraud Controls Do Work
Anti-fraud technology does shorten the fraud duration and reduce the percentage loss. Organizations that utilize anti-fraud controls report less damage and loss overall.
Higher Authority Means Greater Losses
Perpetrators of fraud who hold a position of power cause greater loss. The median loss for fraud committed by owners and executives is at $500,000. Scheming managers cause a median loss of $130,000, while fraudster employees cause a median loss of $75,000.
Teams Cause More Probability of Fraud and More Losses
Fraud that is committed by a network of employees or a department of dishonest employees is more damaging than fraud committed by a single person. The median loss for a 2-person fraud is $200,000, while it is $355,000 for a 3-person fraud, and more than $500,000 for a 4-person (or more) fraud.
Fraud Recovery is a Challenge
Recovering stolen funds takes lots of effort and up to years of time. Oftentimes, corporations are not able to fully recover losses due to fraud. Only 14% were able to report a full recovery while 58% report that they were not able to recover a single dollar.
Fraud is very real and should be taken seriously. You?ve seen the statistics. Do you really want to be a part of it? Give us a call if you need help investigating a case of fraud in your organization or if you want to institute measures to prevent it. Contact our trusty team of Toronto private investigators for a thorough evaluation of your? fraud risk and fraud prevention plan. Do it today!