How has the pandemic changed the way businesses tackle fraud?

With the rapid rollout of the COVID-19 vaccines across the world, especially in the more developed western countries, people and businesses are beginning to turn their heads to what life will be like once the pandemic is over.

The impact the pandemic has had on business cannot be overstated from changes in operations, changes in market demands, changes in consumer behaviour and changes in the way we work – some things may go back to how they were, but others will not.

This new environment is also opening up more opportunities for fraud as devious operators find ways of exploiting the new reality.

This will also mean organisations will need to up their game when it comes to anti-fraud programmes going forward.

To assess how businesses are prepared the US-based Association of Certified Fraud Examiners (ACFE), in collaboration with Grant Thornton, surveyed anti-fraud professionals around the globe regarding the current and expected effects of COVID-19 on the fraud landscape.

The research showed many organisations expected a rise in fraud when the pandemic started.

More than half of the organisations that responded to the survey (51%) said they had uncovered more fraud than usual since the start of the pandemic, with one fifth saying they’ve seen a significant increase.

Just 14% said they had found less fraud over the course of the pandemic.

During the first wave of COVID-19 that hit the planet in the spring of 2020 93% of respondents said they anticipated a rise in fraud. 

The pandemic has also been marked by a significant rise in fraud awareness.

More than 60% of respondents have observed a significant or slight increase in their organisations’ fraud awareness, and only 7% indicated that the level of fraud awareness has decreased.

The reasons behind this rise in fraud awareness could be varied, some of it is likely due to the increased efforts of anti-fraud professionals, more internal conversations around fraud and the heightened coverage of pandemic related fraud in the media.

What will happen after the pandemic?

When asked how they expect the level of fraud impacting businesses over the next year as the world moved on from COVID-19 71% said they expect it to increase, with 21% expecting a significant increase. Just 30% expected not change or a decrease.

More than half of anti-fraud experts expect increases in all types of fraud except financial statement fraud.

Possibly as a result of this, almost 40% of businesses who responded to the survey have increased their investment in anti-fraud technology.

The survey asked businesses how they think the pandemic and the regulatory changes brought in by global governments to combat COVID-19 will have changed the way fraud is carried out.

The two categories highlighted the most by respondents were the changes to working life (working from home) and the change to consumer behaviour (more shopping online/digital events).

More than two thirds of respondents said these two factors had influenced their approach to fraud risk management.Organisations and anti-fraud professionals who want to learn more about how to strengthen their defences against fraud can contact us @ MCC Accountants 0161 707 1500 to speak a Forensic Accountant or you can e-mail us at [email protected]

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