If a decade ago, fraudsters targeted large companies to earn astronomical amounts, today the reality is very different. Fraud affects all sectors and all sizes of businesses. From the moment money flows in and out in an organization, risk does exist and everyone must learn to limit it. This article is the first in my series on fraud and is intended to inform that now fraud can affect even the smallest businesses.
Fraud - a worldwide phenomenon
It is not often talked about in the corridors of companies and when an attempt at fraud occurs, its internal communication is often limited, even in large groups. However, companies are increasingly informed and equipped with detection systems and methods. According to a 2018 PwC study (Global Economic Crime and Fraud Survey 2018), 49% of companies responded that they had been victims of fraud in the past two years compared to 36% in 2016.
Fraud is indeed a real risk and should not be neglected, especially in France where companies are more affected compared to the world level (71% of companies were victims, record level, in 2018).
Cybercrime - the main fraud in France
Various studies have managed to define the main cases of fraud. In 2018, cybercrime became the first most common fraud case in France, followed by the embezzlement of assets and “clever” frauds in which we find the typology of “president fraud” (PwC Press Release, February 2018 , “Cybercrime is becoming the most frequently reported fraud by French companies”).
The top 10 types of fraud are:
cybercrime,
embezzlement of assets,
“smart”
fraud, money transfer fraud,
corruption,
terrorist financing,
unethical behavior,
embargo circumvention,
information falsification.
For some of these cases of fraud, the tightening of regulations and the implementation of stricter penalties have made it possible to reduce or force companies to implement the means necessary for its detection. In particular the Sapin 2 law which forced all companies to conduct a corruption risk analysis.
Fraud affects even the smallest businesses!
If fraud in the world is not on the decline, it is obvious that it continues to increase within SMEs. In 2016, the PwC study ("Global Economic Crime Survey 2016: fraud explodes in France") revealed that the phenomenon affects all French companies, regardless of their size, with in particular a doubling of it on the smallest.
Indeed, we note that, for several years, acts of fraud are no longer reserved for large companies, acts are carried out on several companies with smaller amounts. In 2017, the “Barometer of corporate practices in the fight against fraud and corruption” conducted by Grant Thornton showed that for companies with less than 1,000 employees, 44% of acts of fraud caused damage of up to 10,000 € and did not exceed one million euros.
Fraud is a risk worldwide and in all types of industries and business sizes. This risk is not to be taken lightly and it is necessary to assess the exposure to which the company is subjected, without falling into paranoia. Several means exist to assess this risk: audit, risk mapping or implementation of internal procedures to secure the financial flows of the company.
Do you want to know more about your exposure to fraud and the means you can implement to facilitate its detection? Contact us directly via the form.