Close to half of Northern Ireland's largest businesses have been victims of economic crime in the past two years, with average losses of £100,000 sterling (€158,328), according to a new report.
The Northern Ireland Economic Crime Survey, published today by PricewaterhouseCoopers, points to a boom in white-collar crime. This first comprehensive study suggests that fraud by management and employees is a greater threat to business than any other economic issue.
Over the past two years, nearly 40 per cent of Northern Ireland's biggest private, public and not-for-profit organisations were victims of economic crime with 76 per cent of that committed by employees and staff.
Of Northern Ireland's top 200 companies and 43 government agencies and not-for-profit organisations, 108 were surveyed for the report. Just 58 per cent said they pressed charges where fraud was uncovered, arguing that negative publicity and other factors could prove as damaging as the loss.
The report also warns that cybercrime, such as computer hacking or electronic fraud, is a future risk, with 25 per cent of businesses surveyed believing they will be victims within five years. Not surprisingly, bigger organisations are worst affected by the upsurge in fraud. Of 21 Northern Ireland-based businesses with more than 5,000 employees, 43 per cent had suffered from economic crime with an average loss to each one of £100,000 sterling over the past two years.
The average loss overall to the businesses surveyed was £29,000 with £500,000 the highest recorded loss. According to the authors of the report, the cost of fraud is equal to paying two phantom workers.
PwC partner Mr Paul Kinney said the increase in white-collar crime, especially fraud, had hit staff morale, investor confidence and the value of the company brand itself.
"Our survey suggests that every business in Northern Ireland is a potential victim of fraud perpetrated by a handful of employees, managers and contractors," he said.
"Criminal managers and employees are systematically targeting their employers' cash and assets. Sadly, this reflects on tens of thousands of honest people who take pride in their business, their job and their personal integrity. The days of automatic trust are over."
Part of a wider PwC European Economic Crime Survey, the figures from Northern Ireland were slightly lower than the EU average where, over the past two years, 79 per cent of businesses suffered from economic crime. In Northern Ireland, 41 per cent of companies place the responsibility for preventing economic crime on the board of directors, with almost half saying the responsibility lay with internal audit procedures.
Mr Kinney said more and more companies were becoming aware of the fraud risks but too few actually took steps to prevent economic crime.
"At a time when fraud is becoming more prevalent, harder to detect and is perpetrated in new ways, it is critical that companies start to treat fraud as a fundamental business challenge," he said.
PwC proposed five key elements for a successful anti-fraud regime in business, government and the voluntary sector. Companies should assess existing and future fraud vulnerabilities, monitor fraud risks and encourage "whistle blowers" while developing effective policies to facilitate internal investigations. They should also create a robust fraud response plan and define and communicate the company's stance on fraud to all stakeholders.
