The financial cost of fraud 2017 survey produced by Crowe Clark Whitehill and the University of Portsmouth’s Centre for Counter Fraud Studies (CCFS) shows that since the recession in 2008 there has been a 43% increase in fraud. Average fraud losses are now equivalent to 6.5% of business expenditure, up from 4.6%.

The research reviewed 19 years of data covering loss measurement exercises in different countries and across different sectors. The total value of the expenditure where losses have been measured is over £13.2 trillion.

Jim Gee, head of forensics and counter fraud at Crowe Clark Whitehill, said: ‘The sums involved are huge. Organisations’ behaviour towards measuring and countering fraud can be the difference between a mediocre annual performance and stable growth. Businesses can no longer afford to bury their heads in the sand.’

The report suggests that the steep rise in fraud since the end of the recession may be down to the greater complexity of processes and systems, making it easier to disguise fraud, as well as the fact more transactions are being undertaken by computer and so are vulnerable to cyberattack.

The publication coincided with the official opening of the government’s National Cyber Security Centre (NCSC). Speaking at the launch Chancellor Philip Hammond said in the first three months of its existence, the NCSC has already responded to 188 attacks.

‘The most dramatic threats are the sophisticated, state-sponsored attacks. But the most common threat that businesses and the general public face are the less sophisticated, mass targeted attacks, from phishing to email viruses.

‘The ONS estimate that there were two million such incidents in the past 12 months alone.

‘If these numbers were included in our crime figures, the UK’s crime rate would double,’ Hammond said.

Hammond highlighted official statistics showing 65% of large businesses reported a cyber breach or attack in the past 12 months, while nine out of 10 businesses admit to not having an incident management plan in the event of such a breach.

The Treasury has committed £1.9bn to address cyber security over the life of this parliament and plans to work in partnership with business to reduce levels of cyber attacks.

Hammond said: ‘We will invite business to second up to 100 employees to come and work in the NCSC – allowing us to draw on the best and the brightest in industry - to test and to challenge the government’s thinking as we take this project forward.’

Crowe Clark Whitehill’s report, The cost of fraud 2017, is here.

Report by Pat Sweet