Two-thirds of UK organizations hit by Covid-era fraud

UK businesses have suffered from a spike in fraud during the pandemic years. Although cybercrime and fraud in the supply chain are above the global average, experts expect this experience can help businesses become more resilient to financial crime in the years to come.

Britain had already seen an exponential boom in fraudulent activity before the pandemic. In the 15 years since 2003, the value of fraud has risen by the billions, with financial services accounting for most of the glut, with a bill of just under £900m in 2017. It was also the second year in a row that the UK had seen the value of fraud across the country cross the £2billion mark, after rising sharply in 2016.

However, the landscape has changed dramatically since 2020 as the Covid-19 outbreak has opened up even more opportunities for fraudsters to commit financial crimes. With many companies needing to rapidly deploy digital platforms to support remote working during lockdowns, cybersecurity initially took a bit of a back seat. As businesses prioritized speed over security, while struggling to preserve productivity, they exposed themselves to different types of attacks — and not just on the digital front.

According to new research from PwC, 64% of UK businesses have admitted to being victims of fraud or economic crime in the past two years. Figures from the latest PwC report Global Economic Crime Survey 2022 found that this put UK businesses well above the global average for this year – 46% – and saw the situation worsen since the survey was last conducted in 2020. Then 56% of UK businesses said they had faced economic crime.

In terms of the types of fraud reported, cybercrime was the most common. Around 32% of UK respondents had experienced a cyber breach in the past two years – although interestingly this figure was lower than the number of people victimized by cybercrime in the 2020 survey – at 42%. Globally, however, piracy has become more prominent. When asked what type of outside perpetrator had an impact on their business, 31% of international respondents said “hackers”.

In the UK, one thing that has exploded to rival cybercrime seems to be fading is supply chain fraud. With businesses working remotely, supply chains became more difficult to exploit and monitor, and so supply chain fraud entered PwC’s list for the first time, but accounted for almost a fifth respondents. Globally, international respondents seemed to be less affected by supply chain fraud, in comparison – only one in eight respondents cited it as impacting them.

Looking at these trends, Fran Marwood, Partner and Head of Digital and Forensic Investigations, suggested that it’s to be expected. In some ways, meanwhile, although the numbers look grim for UK businesses, there are signs that fraud will decline in the period ahead.

Marwood added: “From what we’re seeing in the market, I think some of the trends are temporary, with, for example, potentially undiscovered instances of fraud and misconduct as traditional controls and culture businesses are evolving to keep pace with remote working. Encouragingly, in some cases, the incidence of economic crime has decreased due to the investments organizations have made in effective compliance programs, cyber defenses and fraud prevention controls.

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Edward L. Robinett