North East businesses still underestimate the threat of economic crime

Jan 22 2008 By The Journal

THE latest Economic Crime Survey which PricewaterhouseCoopers LLP has released shows that businesses continue to underestimate the risk of fraud – fewer than one in five expect to be affected, but in reality, half have suffered from some sort of fraud.

Corruption and bribery are the fastest-growing forms of fraud, although asset theft remains the most prevalent. The most common types of fraud are:

• Asset theft – 77%*

• Accounting fraud – 40%

• Intellectual property infringement – 32%

• Corruption and bribery – 28%

• Money laundering – 20%

Ian Elliott, forensic services partner, PricewaterhouseCoopers, said: “The fight against fraud is a constant struggle for businesses in the North-East. Our study shows that in order to assess and manage risk, an ongoing evaluation of all fraud risk management activities is vital. Consistent and effective prevention is better than after-the-event reactions.”

The PricewaterhouseCoopers Economic Crime Survey also throws light on the changing profile of fraudsters. There has been a significant reduction (23%) in fraud being committed by senior management – non-management and other employees now account for 60% of frauds.

The typical fraudster is now 36 years old, highly educated (twice as many hold a postgraduate degree than in the survey two years ago), and will have been in position for less than two years.

Ian Elliott concluded: “Any business in the North-East that operates in high-risk sectors or relies on a mobile workforce would be wise to assess its fraud- prevention measures in order to ensure it is not putting itself at unnecessary risk.”

Further detail on the PricewaterhouseCoopers survey can be found at www.pwc.com/uk/crimesurvey

* % of companies surveyed that reported economic crime, including the type of fraud named above.