According to a recent study by the Association of Certified Fraud Examiners, organizations lose approximately 5% of their revenue to fraud every year, and the 2,402 cases cited in the report caused total losses of $3.4 billion. The median loss per case was $104,000, while the average loss per case was $1,457,000.
The report found 84% of all fraudsters displayed at least one behavioral red flag, and those who did so caused median losses that were 33% greater than those who did not. The most common behavioral clues were: living beyond means (39%); financial difficulties (29%); unusually close association with vendors or customers (17%); control issues and unwillingness to share duties (12%); and irritability, suspiciousness or defensiveness (11%).
The highest median losses were associated with other key red flags: excessive pressure from within the organization ($532,000 per incident), past legal problems ($400,000 per incident), unusually close association with vendors or customers ($300,000), refusal to take vacations ($250,000), and a “wheeler-dealer” attitude ($250,000).
When it comes to the profile of the fraudster, they are most commonly either an employee or manager (both 41%), 60% had a university degree or higher, more than two-thirds are 31 to 50 years old, and men are responsible for 71% of cases at a median loss of $125,000, compared to women perpetrating 28% of cases at a median loss of $90,000.
When it comes to detection, 43% of cases were uncovered through tips—three times more than the next most common method—and the most common reporting mechanisms were web-based (46%), email (34%) and telephone (23%). More than half of tips came from employees, 21% from customers and 11% from vendors.