Fraud losses significant in 2010

News Article - 23 July 2010
Category: Business

UK businesses are continuing to experience high levels of fraud, according to recent research. BDO LLP's six-monthly update on fraud levels reveals that losses due to fraud in the first six months of 2010, which totalled £1.06bn, were almost the same as total fraud losses in 2008.

This is the first time fraud losses have passed £1bn in a six month period since BDO LLP started compiling data seven years ago. The average value of a single fraud has also risen to almost £6m, a £1m increase on 2009's figure.

Internal managers, who commit 16% of fraud, were highlighted as one of the groups most likely to behave unethically. Greed was identified as the key motivator, with 85% of fraudulent activity driven by a desire to maintain a wealthy lifestyle.

Geographically, 71% of all fraudulent activity originates in London and the South East. Large-scale year-on-year increases were also seen in many areas, with Wales experiencing 15% of fraud in the first six months of 2010 compared to just 2% in the whole of 2009.

Broken down into sectors, the biggest fraud risk is found in the finance and insurance industry, which experiences 49% of all reported fraud cases. Mortgage fraud emerges as one of the most commonly targeted areas, accounting for a fifth of all reported fraud and 36% of finance sector fraud.

According to BDO LLP, the fraud increase is characterised by a rise in 'revenue dilution fraud,' whereby management figures divert contracts away to third parties or set up ghost companies to siphon off funds. In the past, UK business fraud centred primarily on procurement, whereby public and private sector organisations would pay too much for goods or services.

Companies must remain highly vigilant in the post-recession climate in order to prevent taking significant hits to the bottom line through unethical activity. IT security remains a key way for businesses to help reduce such problems and increase overall resilience to fraudulent activity. Access business software can help tighten access restrictions, ensuring that workers are given only the permissions necessary to work productively, and allowing senior figures to quickly see who has accessed what information and when. These security benefits can help by acting as both a deterrent and as an avenue to redress possible fraudulent activity

For more information, please call Access on 0845 345 3300.

Article keywords: business software, business news, industry news, enterprise software, business fraud, business technology

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