Fraud Costs

We’re often asked how much insurance fraud costs the industry (the answer is an estimated $30 billion annually), so a new global survey on corporate fraud commissioned by risk consulting firm Kroll and conducted by the Economist Intelligence Unit makes for interesting reading. According to its findings, new technologies, new investors and expansion into overseas markets are opening the door to different forms of fraud and four out of five companies have suffered from corporate fraud in the past three years. As you might expect the associated costs are substantial. The survey shows the average cost due to fraud to large companies (those with annual revenues of more than $5 billion) was more than $20 million, with about one in 10 losing more than $100 million. In some sectors, more than one-fifth of all companies have lost more than $1 million – these sectors include financial services and healthcare. Looking to future risks, companies cite theft, loss of or attack on information as their biggest concerns, with 20 percent of respondents describing themselves as highly vulnerable. More than 30 percent believe that IT complexity has increased their exposure to fraud. For those companies, the good news is that there are some innovative insurance covers out there to help protect against cyber risks. See our paper on information security and liability for further information.

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