Companies underestimate risk of fraud

Oct 16 2007 by Andrew Mernin, The Journal

BRITISH companies are underestimating the risk of fraud despite the costs of the crime more than doubling to £1.75m in the past two years, new research has found.

The average cost to UK firms hit by business fraud has soared from £800,000 in 2005, yet only 17% of 302 companies questioned by accountancy group PricewaterhouseCoopers (PwC) believed they were likely to become a victim.

The UK also suffers from some of the highest levels of business fraud in the world – running at twice the global average, PwC’s global economic crime survey said.

Corruption and bribery were the fastest growing crimes, with one in 10 companies claiming to have lost out on a business opportunity to a competitor who had paid a bribe.

British businesses that suffered from fraud were typically hit 15 times over the past 24 months, while nearly half of all fraud cases in the UK involved an overseas party.

The most common type of fraud crime was asset misappropriation, while accounting fraud, intellectual property infringement and money laundering were also common.

PwC said public records did not reflect the full scale of the problem as hardly any cases were pursued through the courts.