We recently collaborated with the ACFE to survey anti-fraud professionals around the globe regarding the current and expected effects of COVID-19 on the fraud landscape. James Helme summarises the report.

Our report, in partnership with the Association of Certified Fraud Examiners (ACFE), shows that 51% of those surveyed have uncovered more fraud since the onset of the COVID-19 situation, and that the majority expect fraud to increase over the next year.

As you would anticipate, organisations have responded to the challenges of the changing landscape by modifying their anti-fraud programmes and spending more on anti-fraud technology.

Download the full report

Summary of the report

Types of fraud

Of the 13 specific fraud risks identified in the report, the two that are expected to increase the most in the next 12 months are cyberfraud (eg, business email compromise, hacking, ransomware, and malware) and social engineering (eg, phishing, brandjacking, and baiting).

Anti-fraud budgets

At a time when businesses are struggling, it can be challenging to justify anti-fraud spending, but at least 60% of organisations said they kept the same budget in 2021 as in previous years, and 48% expect their 2022 budget to remain about the same.

What is expected to change, however, is the mix of spending, with anticipated increases in anti-fraud technology (38% of respondents) offset by a reduction in travel and site visits by anti-fraud staff.

Factors impacting fraud risk

The two main factors affecting the fraud risk landscape are the rise of remote working and changes in consumer behaviour (ie increased online shopping).

Challenges facing anti-fraud programmes

Respondents noted that changes to investigative processes (such as gaining access to evidence, conducting interviews remotely and inability to travel) and to the control/operating environment (such as changes in processes due to the shift to remote working, and changes in staffing) have presented the greatest challenge to organisations.

Changes for anti-fraud programmes

More than 80% of organisations have already implemented one or more changes to their anti-fraud programmes. The two most common initiatives are updating or conducting internal fraud awareness training (46%) and updating or conducting a fraud-risk assessment (43%).

The perfect scenario for fraud

The increased risk of fraud since March 2020 has been suggested for some time, with commentators recognising that changing business activities and consumer behaviour, increased motivation for fraud, and reduced effectiveness of controls, have combined to create a perfect scenario for fraudsters (see Tackling the rising threat of fraud risks in the food and beverage sector).

While up until now it may have been about riding the volatile market conditions and business survival, entities are now looking to address the risks in the ‘new normal’, including fraud.

The anti-fraud playbook

For many entities, the prospect of addressing this area can appear daunting given the many ways in which fraud can occur in a business. I would counsel that the application and deployment of the ACFE’s anti-fraud playbook provides a strong framework for businesses to assess and develop their fraud-risk management programme.

To discuss how your business can address this area, contact James Helme.

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