Businesses Losing 5% of Revenue to Fraud

Organizations around the world lose an estimated five percent of their annual revenues to occupational fraud, according to a survey of Certified Fraud Examiners. Occupational fraud occurs when an employee intentionally misuses or abuses their position for their own enrichment at the cost of company assets. When this percent is applied to the estimated 2013 Gross World Product, the figure translates to a potential fraud loss of more than $3.5 trillion. The 2014 Report to the Nations on Occupational Fraud and Abuse contains the survey results as well as data compiled from 1,483 cases of fraud that were submitted by Certified Fraud Examiners. The report finds that:

·         Fraud schemes are very costly. The average loss caused by occupational fraud cases was $145,000. 24% of the cases examined caused losses of at least $1 million.

·         Schemes can continue on for months or even years before they are detected. Many fraud cases examined in the study lasted an average of 18 months before being caught.

·        Small business face increased risk. The small organizations in this study suffered disproportionately, with an average loss of $154,000, which is higher than the overall average loss for fraud cases examined in the study.

The Association of Fraud Examiners has conducted research into how occupational fraud is committed. To read their observations, click the link here.