Cyber Drives UK Fraud Losses to £125 Billion

Fraud now costs UK organizations a staggering £125 billion each year, with cyber playing a part in most incidents, according to accountancy and audit giant Crowe Clark Whitehill.

The firm teamed up with the University of Portsmouth’s Centre for Counter Fraud Studies (CCFS), reviewing 19 years’ worth of data to compile The Financial Cost of Fraud 2017 report.

It found a 43% increase in fraud since 2008 – up from 4.6% of business expenditure to 6.5%. 

The report pegs fraud as “the last great unreduced business cost,” but claims that some organizations have taken action to reduce related losses by up to 40%.

If all organizations had been able to do the same over the research period, the UK could have saved more than £1.4 trillion, it is estimated.

Report co-author Jim Gee, head of forensics and counter-fraud at Crowe Clark Whitehill, argued that breaking out the cyber element of fraud is problematic as the two are “inextricably linked.”

“There is significant overIap, but this is difficult to segment and measure. If fraud involves a computer, for instance, does this come under the banner of ‘fraud’ or ‘cyber-security’?” he told Infosecurity.

“In today’s digitized world, almost everything we do is done via a computer or equivalent cyber-technology. Most things can therefore be classified as ‘digital’ – from straightforward cases like hacking, to fraudulent activity which merely involves the use of a Word document, for example.”

The news comes a month after the government’s own figures revealed 3.6 million fraud incidents last year, with over half (53%) categorized as cyber enabled.

However, the Office of National Statistics’ Crime Survey for England and Wales included only “Experimental Statistics” for fraud and cybercrime this time around.

A separate report from Financial Fraud Action UK last year claimed more than one million cases of financial fraud in the first half of 2016, a 53% year-on-year increase.

What’s Hot on Infosecurity Magazine?