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Study: Two thirds of British firms hit by fraud

Written on May 31, 2022

Two thirds of British companies have been targeted by fraudsters in the past two years with cyberattacks the most common crime. 

A survey of big corporations found that 64% of them had been affected by fraud and other economic crimes during that time — significantly above the global average and about a 10% increase on the domestic figure from two years ago. The average cost to those companies ranged from £800,000 (~$1.1 million) to nearly £4 million (~$5.1 million). 

The global economic survey, conducted by researchers at PwC, questioned nearly 1,300 companies, including more than 100 in Britain, and found that 46% had been the victims of fraud and economic crime. 

Researchers found that reports of fraud against UK companies had increased: in the last survey in 2020, 56% of businesses reported that they had been targeted. 

The researchers also highlighted some positive trends. The survey found that reported incidents of bribery and corruption had fallen significantly. Ten percent of firms said they had dealt with bribery and corruption over the past two years, compared with 25% in the 2020 report. Reports of accounting and financial statement fraud had also dipped from 26% of companies in 2020 to 10%. 

Cybercrime was the most frequent economic crime to affect British companies. Thirty-two percent said that they had suffered cyber breaches, but the trend was down compared with 42% in the 2020 survey. 

The report said that cybercrime can be a precursor to other types of crime. “Given that systems are now more integrated than ever, there is a major concern that parties in their supply chain or customer base may prove to be the weak links in their cyber defenses,” it said. Supply chain fraud was included for the first time, with 19% of firms saying they had been victims. 

The researchers also warned that as companies rushed to promote their socially responsible credentials through ESG programs, they were increasingly vulnerable to making fraudulent claims. 

The authors said: “The pressure to publish targets, and the shareholder value placed on achieving these — with linkages frequently put in place between meeting those targets and directors’ remuneration — creates an environment where organizations are at increasing risk of greenwashing. This is the attempt to convey a false impression of their environmental credentials.” 

About half of UK respondents said fraud was committed by external fraudsters, compared with 43% globally. The three leading groups of external fraudsters in the UK were customers, hackers and vendors or suppliers. 

Noting the fall in bribery, corruption and accounting fraud, the report said the dips were likely to be “temporary”. It suggested the fall was triggered by the disruption caused by the coronavirus pandemic “and may reflect a decrease in detection rather than occurrence”. 

However, it added that there was anecdotal evidence that “investments by some organizations in stronger, better designed and implemented compliance programs and fraud controls have improved defenses”. 

It said serious fraud was most frequently detected by monitoring suspicious activity using forensic technology and by internal audits. Security procedures and whistleblowers were also responsible for the detection of fraud.