Financial Crime World

PwC’s 2022 Global Economic Crime and Fraud Survey: $42B in Total Losses and Beyond

In the latest installment of its Global Economic Crime and Fraud Survey, PricewaterhouseCoopers (PwC) has reported a concerning rise in economic crime, resulting in a staggering total loss of $42 billion for the year. This alarming figure, based on responses from over 3,600 business leaders across 91 countries and territories, sheds light on the significant threats corporations and individuals face from fraudulent activities, identity theft, and unethical business practices.

Damaging Business Impacts Beyond Monetary Costs

Financial crime is increasingly becoming a significant threat, leading to an average annual financial crime cost increase of 10% as compared to previous years, according to PwC. The concerning trend is that nearly half of the respondents, 49%, admitted to experiencing at least one economic crime incident over the last two years.

Small and Medium-sized Enterprises (SMEs): The Biggest Victims

Alarmingly, the smallest businesses were hit the hardest, with 53% of SMEs reporting an incident. This alarming trend underscores the importance of strong anti-fraud controls for SMEs.

Fraudsters’ Target Areas

Fraudsters targeted various areas, including:

  • Procurement: 26%
  • Financial reporting: 21%
  • Operating processes: 19%

Rising Data Fraud Incidents

Another worrying finding in the survey was a troubling 29% increase in data fraud incidents from the previous year. In today’s digital age, understanding and combating this threat is crucial.

Consequences Go Beyond Financial Losses

The consequences of economic crime extend far beyond financial losses, damaging businesses in other ways:

  1. Brand or reputation impact (27%)
  2. Regulatory sanctions (26%)
  3. Loss of market share (22%)

Moreover, 51% of companies reported negative consequences for employee morale and business ethics.

Countering the Tide: Technology and Advanced Analytics

In response to this escalating threat, businesses are taking actions to invest in technology and advanced analytics to strengthen their anti-fraud controls. Over half, 58%, of the respondents, indicated their intention to increase their investment in technology.

Machine Learning, AI, and Robotic Process Automation (RPA)

Advanced analytics, machine learning, and AI are becoming crucial tools, allowing businesses to proactively combat fraud and mitigate risks more effectively. RPA is another technology, becoming increasingly popular, with its ability to automate repetitive tasks, freeing up valuable human resources for more strategic analyses.

Staying Ahead of the Threat: Investing in Robust Cybersecurity and Risk Management Strategies

With economic crime on the rise, organizations must prioritize their investment in robust cybersecurity and risk management strategies. By doing so, they can protect their businesses not just from financial losses, but also from the damaging impacts on their brand, reputation, and employee morale.