Half of firms hit by serious fraud

UP to 50% of businesses have experienced instances of serious fraud in the last two years — well above the global average — according to a survey.

The 11th edition of the Global Fraud Survey from professional services firm Ernst & Young includes Ireland for the first time. As such, there is no clear picture of how the situation has changed in the country over recent years. However, the global average, according to the survey, is 16%, with approximately 21% of companies in Western Europe experiencing fraud activity in the same timeframe.

According to Ernst & Young’s Julie Fenton: “These figures are perhaps unsurprising given the credit crunch and ensuing recession. There has been increased pressure on businesses and board members to maintain financial results in difficult conditions, which has encouraged new frauds.”

However, Ireland fares better than most countries when it comes to actually doing something to combat fraud. According to the findings, 70% of Irish companies have a clear process for reporting incidents to their board, compared to 50% of companies on a worldwide scale, and 50% of Irish companies have a response plan compared to 39% of global firms.

However, on a whole, Irish companies are still more vulnerable to fraud than the international average.

Some 40% of Irish companies have never assessed the risk of fraud to their business. The global average is 14%.

“Ireland is well-prepared in some areas of fraud management, but it is still seriously exposed in other key areas,” said Ms Fenton.

“The fact so many businesses in Ireland have no formal policy towards handling fraud risk is truly alarming considering Ireland is experiencing greater incidence of fraud attacks than many other countries,” she added.

Ms Fenton said: “Despite the pressure on corporate resources, prioritising anti-fraud and anti-corruption efforts is essential.”

Although this marks Ireland’s debut inclusion in the global survey, it was featured in Ernst & Young’s European fraud survey last year.

When asked in that survey if they expected to see an increase in fraud over the following 12 months, 59% of Irish respondents answered yes. The European average is 55%.