Most managers and business owners think that their company or organization is immune to fraud, and they can’t be more wrong! As we’ve mentioned in another blog on stopping occupational fraud, about 5% of all revenue in companies and organizations is lost to theft or fraud by partners, owners, and employees who has access to a company’s assets. This means that there is a huge chance that fraud is happening in your organization, no matter how ‘small’ the fraud is.
There is no denying that fraud exists, the only things which could be different for everyone would be the level and pervasiveness of fraud. Nonetheless, it is a problem for all organizations big and small. In fact, even the government deals with white-collar fraud!
The real problem with fraud is that not all organizations have taken measures to prevent or minimize it, not even employ ways to detect it for it to be thwarted before it happens. Perhaps it is the thought that one’s organization is immune to it, or perhaps it is complacency; but one thing is for sure, you can do something about fraud and it starts here!
5 Truths about Fraud
The beauty of acknowledging that fraud can happen is that you can be ready for it. You wouldn’t want to be a part of fraud statistics wouldn’t you? Here’s some eye-opening data from the 2014 Report to Nations to help you understand how serious fraud is and why it is important for you to minimize your risks as much as possible.
- Organizational fraud costs an estimated $3.7 Trillion dollars every year. That is the approximated annual total for the Gross World Product’s estimated revenue loss of 5% to fraud.
- More than 20% of all fraud cases costs at least $1 million, and that the median loss to fraud is at about $145,000.
- Owners and CEOs sometimes commit fraud as well, and that the higher in the organization the fraudster is, the higher would be the value of the loss.
- Fraudsters often have a clean record. They often do not have any criminal history that could be a red signal for fraud. First time offenders are not uncommon.
- Approximately 58% of all organizations were not able to recover their losses from fraudsters.
It does not look good, eh? So here’s what you can do:
What you have to know is that you can do something about fraud. It can be as easy as having more effective policies to discourage and thwart fraudsters or hire some specialists to detect fraud when it happens. In fact, measures to detect fraud has been effective for discovering about 40% of all known cases. There are measures such as careful designs of internal controls and third party audits to help minimize the cases of fraud. It is all a matter of being proactive and understanding that although it is next to impossible to totally eradicate fraud, there are ways to get some control over it.
So what to do? You can start by following this blog and reading up on more of our fraud-related articles. If you want to truly find out if someone has been committing some sort of fraud in your organization, simply contact us and we’ll do our best as one of the leading private investigators in Toronto. It won’t hurt to be more proactive!