In 2010, fraud committed by employees against their employers was estimated to have caused losses of £567m. That figure only accounts for cases which were reported and caused loss in each individual case in excess of £100,000, excluding loss to public bodies. Procurement fraud cost both the private and public sectors approximately £3.4bn, often involving employee deception and collusion with third parties.
With the downturn of the global economy, the tide has in effect gone out, revealing higher levels of fraud under the surface of organisations' operations, which were previously hidden by the ongoing increase of turnover and profit. Organisations are now demonstrating an appetite to investigate and recover losses where fraud has been discovered and are further showing increased attention to the implementation of suitable counter-fraud initiatives.
The unfortunate reality is that whilst being aware of the need to address the risk of internal and external threat of fraud, many organisations have to work with reduced budgets to understand why an employee may commit fraud, learn about the warning signs, understand the process of investigation and the options of recovery and implement change to create a zero tolerance culture.
Dealing with issues of employee fraud can be a minefield with a range of issues presenting themselves such as whether to report to the police, how to deal with a regulator, recovery of the loss, reputation and share value protection and retaining general employee confidence with the employer.