Midlands loses nearly £19bn to fraud each year
Fraud is costing businesses and individuals across the Midlands £18.9 billion, and £137 billion nationally every year, according to research published by national audit, tax, advisory and risk firm Crowe.
The Financial Cost of Fraud Report, developed by Crowe in
conjunction with the Centre for Counter Fraud Studies at the University of
Portsmouth, draws on more than 20 years’ extensive research across a range of
industries, organisations and countries, to reveal the true scale of this
problem.
Johnathan Dudley, managing partner at Crowe’s Midlands
office in Oldbury, said: “In every sector of every country, fraud has a serious
and detrimental impact on quality of life. At a time when Covid-19 has put
strain on the quality of life, and financial wellbeing, of individuals and
organisations alike, the importance of managing fraud losses has never been
greater.”
Since the start of the coronavirus crisis, there has been a
19.8 per cent surge in fraud both directly related to the coronavirus and
general economic-crisis driven fraud.
For many organisations, fraud is a problem that can be
tackled. The report reveals that losses can be, and have been, reduced by up to
40 per cent within 12 months. It is estimated that, were organisations in the
UK to correctly measure and introduce actions to reduce fraud, savings of up to
£55 billion could be made annually. This sum is greater than the UK
Government’s spend on defence in 2019-2020.
Mr Dudley said: “New and diverse threats have meant all
business, from small and medium-sized enteprises here in the Midlands to huge
multi-national conglomerates have suffered rising losses each year, and action
to prevent, mitigate and combat fraud has not kept pace.
“Fraud needs to be viewed as a business cost. In almost
every other area of business life, organisations know, measure and manage their
costs. Fraud should be no different, particularly considering the numbers
involved.
“The numbers are staggering, but may be hard to grasp. In
the Midlands alone, the amount lost to fraud almost matches the net worth of
Jaguar Land Rover, while the amount lost to fraud globally represents more than
twice the UK’s entire GDP.”
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