Corporate fraud expected to rise in the next 12 months

Most anti-fraud experts (71%) believe the level of fraud at their organizations will increase in the next 12 months, according to a report from professional services firm Grant Thornton and the Association of Certified Fraud Examiners (ACFE). The report surveyed 1,539 anti-fraud professionals in March and April 2021.

A shift to remote work and increased e-commerce and digital interaction with customers and suppliers opened up more threat surfaces for fraud during the pandemic. More than half of anti-fraud professionals (51%) said their organization uncovered more fraud than usual since the start of the pandemic, with one-fifth identifying a significant increase. Only 14% said they uncovered less fraud at their organizations since the onset of the Covid-19 pandemic.

Anti-fraud professionals, however, expect fraud to rise further in the next 12 months, with 71% expecting an increase and 21% of that group further expecting a "significant" increase.

Most respondents believe there will be an increase in all types of fraud risks. Cyberfraud (hacking, ransomware) and social engineering (phishing, brandjacking) were the categories most expected to increase, with more than 80% of respondents expecting growth in the two areas. The three categories least expected to increase were in internal and occupational fraud: employee embezzlement (54%), bribery and corruption (52%), and financial statement fraud (47%).

Most professionals don’t expect to employ diminished resources to combat fraud in the coming year. Eighty-six percent reported increases or flat budgets for anti-fraud programs in FY2021, while 38% said their budgets for anti-fraud technology increased – making it the most popular area for investment increases.

Forty-three percent of respondents believe their anti-fraud program budgets will increase in the next year, while 48% expect their budgets to remain the same.

The two factors that anti-fraud professionals identified as having the greatest effect on the fraud risk landscape and programs were changes in business operations (such as the shift to remote work) and changing consumer behavior (including increased online transactions). Two-thirds said these pair of factors had a significant or moderate influence on the fraud risk landscape and their fraud risk management programs, and are expected to remain the top risk factors in the next 12 months.

Most organizations (over 80%) implemented one or more changes to their anti-fraud programs, according to the Grant Thornton survey. The most common changes were updating or conducting internal fraud awareness training (46%) and updating or conducting fraud risk assessments (43%). Anti-fraud professionals expect these to remain the most common adjustments over the next 12 months.

As for fraud awareness, more than 60% of respondents said they saw a significant or slight increase in their organization’s recognition of the issue – which could be partly attributed to heightened media coverage of pandemic-related fraud schemes.