Global Economic Crime and Fraud Survey 2020

Fighting fraud: A never-ending battle

Fraud rates remain at record highs - are you prepared to fight it off?

39%

of all incidents in the last two years are due to customers, hackers and vendors/suppliers
59%

of Belgian CEOs are concerned with their readiness to respond to a crisis
47%

of companies experienced a fraud in the past 24 months

6 is the average number of frauds reported per company

Judging from the news reports, fraud seems to be everywhere. Our latest global survey of fraud and economic crime suggests this isn’t far from the truth. We surveyed more than 5,000 respondents across 99 territories about their experience of fraud over the past 24 months. Asking things like whether they’d been hit by fraud. How many times. What type. And what they’d done to prevent it happening again.

47% of companies experienced a fraud in the past 24 months

Nearly half had suffered at least one fraud. The most common types were customer fraud, cybercrime, and asset misappropriation. And there was a roughly even split between frauds committed by internal and external perpetrators, at almost 40% each – with the rest being mostly collusion between the two.

Rudy Hoskens, Partner, PwC Belgium

Customer fraud, cybercrime and asset misappropriation remain the most committed types of crime. This was already confirmed in the latest 2020 CEO Survey where 71% of Belgian CEOs see cyber attacks as a threat to their organisation's growth prospects. Almost one third (29%) of them are even 'extremely concerned' about cyber threats. Reacting too slowly can not only cause more immediate damage, it can cascade into a broader crisis.

“Organisations in Belgium are becoming increasingly aware that fraud and economic crime is a never ending battle. With a number of high-profile cybercrime cases in recent months affecting businesses in Belgium, it is clear that this type of crime has become an issue that cannot be ignored. As an increasing portion of economic activity moves online, cybercrime has moved from obscurity to the spotlight of consumer, corporate and national security concerns”. Rudy Hoskens, Partner, PwC Belgium

The perpetrators: who’s committing fraud

Fraud hits companies from all angles - the perpetrator could be internal, external or in many instances there is collusion. In the last two years, 39% of respondents said external perpetrators were the main source of their economic crime incidents. One in five respondents cited vendors/suppliers as the source of their most disruptive external fraud.

13% of respondents who experienced fraud in the last two years reported losing more than 45.8 million euros (US$50 million). Antitrust, insider trading, tax fraud, money laundering, and bribery and corruption are reported as being the top five costliest frauds in terms of direct losses - sometimes compounded by the significant cost of remediation.

Three steps to combat fraud

Taking action: being prepared

Investing in preventing fraud pays dividends – but are you doing enough? Barely half of the organisations in our survey allocate dedicated resources to fraud risk assessment, governance and managing third parties. To raise your game in preventing fraud, you should focus on three actions.

First identify, rank and address all your risks.
Second, back up your anti-fraud technology with the right governance, expertise and monitoring.
Third, take notice of fraud when it happens.

Responding: doing the right thing

When your organisation is hit by fraud, how do you respond? Nearly half of the companies in our study said they didn’t conduct an investigation. But of those who did, 60% ended up in a better place afterwards. In fact, the disruption caused by a fraud can act as a positive inflection point – a trigger to an organisational transformation that strengthens the organisation’s defences and responses for when the next fraud comes along.

Emerging stronger: measuring success

Nearly 40% of companies in our survey plan to increase their spend on fraud prevention in the next two years. But will they see a return on their investment? The answer’s probably yes: our research reveals a clear link between fraud prevention investments made upfront and reduced cost when a fraud strikes. For example, we found companies with a dedicated fraud programme in place spent 42% less on response and 17% less on remediation costs.