Crowe report highlights staggering £130 billion annual cost of fraud in UK plc

Fraud is costing businesses and individuals in the UK £130 billion each year. The Financial Cost of Fraud Report 2019, developed by national audit, tax, advisory and risk firm Crowe in conjunction with the Centre for Counter Fraud Studies at the University of Portsmouth, also reveals that fraud is costing the global economy a massive £3.89 trillion, with losses rising by 56% in the past decade.

The report, which was first published in 2009, draws on over 20 years’ extensive 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 document 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 7.15% of expenditure compared to 4.6% 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 80% of the UK’s entire GDP.”

Jim Gee

Jim Gee

Nonetheless, the 28-page report – authored by Gee in tandem with Professor Mark Button – also highlights that, for many businesses, fraud is a problem that can be tackled. It’s estimated that, were organisations to correctly measure, manage and introduce procedures designed to reduce fraud, potential savings of up to £76 billion could be made annually. That’s a sum 57% greater than the UK Government spent on defence solutions in 2018-2019.

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 of it is detected. The question is not if it’s 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, subsequently enhancing the profitability of companies and ensuring better-funded public sector and charitable organisations.”

In a joint conclusion to the document, the authors state: “In any economic climate, not to consider the financial benefits of making relatively painless reductions in losses to fraud and error is foolhardy. Doing so can mean more money for better public services, more profitable companies and charities better able to fulfil their charitable purposes.”

*Read The Financial Cost of Fraud Report in full here

About the Author
Brian Sims BA (Hons) Hon FSyI, Editor, Risk UK (Pro-Activ Publications) Beginning his career in professional journalism at The Builder Group in March 1992, Brian was appointed Editor of Security Management Today in November 2000 having spent eight years in engineering journalism across two titles: Building Services Journal and Light & Lighting. In 2005, Brian received the BSIA Chairman’s Award for Promoting The Security Industry and, a year later, the Skills for Security Special Award for an Outstanding Contribution to the Security Business Sector. In 2008, Brian was The Security Institute’s nomination for the Association of Security Consultants’ highly prestigious Imbert Prize and, in 2013, was a nominated finalist for the Institute's George van Schalkwyk Award. An Honorary Fellow of The Security Institute, Brian serves as a Judge for the BSIA’s Security Personnel of the Year Awards and the Securitas Good Customer Award. Between 2008 and 2014, Brian pioneered the use of digital media across the security sector, including webinars and Audio Shows. Brian’s actively involved in 50-plus security groups on LinkedIn and hosts the popular Risk UK Twitter site. Brian is a frequent speaker on the conference circuit. He has organised and chaired conference programmes for both IFSEC International and ASIS International and has been published in the national media. Brian was appointed Editor of Risk UK at Pro-Activ Publications in July 2014 and as Editor of The Paper (Pro-Activ Publications' dedicated business newspaper for security professionals) in September 2015. Brian was appointed Editor of Risk Xtra at Pro-Activ Publications in May 2018.

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