Predicted Rise in Corporate Fraud Requires Risk Management


A recent survey of anti-fraud professionals revealed a widespread concern that corporate fraud will increase at their organizations over the next 12 months, aligning with further digitalization of consumers and supplier interactions and the growing shift to remote work in the wake of the pandemic. Now more than ever, businesses should implement risk management strategies and seek expert support to prevent fraud wherever possible.

According to the survey, conducted by the Association of Certified Fraud Examiners in partnership with professional services firm Grant Thornton, 51% of participating anti-fraud professionals reported the rate of fraud at their organizations being more than usual since the onset of the pandemic, and 71% of the respondent anti-fraud professionals stated they are expecting fraud to rise even further. Changing consumer behavior and business operations in a direction toward virtual experiences, such as online transactions, are two factors survey respondents said weighed significantly or moderately on the influence of increased fraud risk.

Fraud associated with federal funds granted during the pandemic to struggling businesses appears to be on the verge of rampancy. As of March 2021, the U.S. Department of Justice (DOJ) publicly charged 474 defendants with crimes associated with fraud schemes connected to the pandemic for attempting to obtain over $569 million from the government illegally. In a stern comment published by the DOJ, acting Assistant Attorney General Nicholas L. McQuaid said, “To anyone thinking of using the global pandemic as an opportunity to scam and steal from hardworking Americans, my advice is simple – don’t. No matter where you are or who you are, we will find you and prosecute you to the fullest extent of the law.”

The healthcare industry was hit particularly hard during the pandemic due to often necessary and urgent changes in third-party vendors and suppliers for physician offices, medical centers, and hospitals across the U.S., creating vulnerabilities that exposed many businesses to hidden risks including fraud. The DOJ has recovered billions of dollars from healthcare fraud lawsuits since 2017, as noted in our recent article. Without a fraud management strategy in place, fraud can grow like a virus—destructive to the health of businesses and exposing them to mounting losses.

One type of corporate fraud that is quickly becoming one of the most widespread crimes around the globe is procurement fraud. Procurement fraud is a complex form of fraud that often flies under the radar, as noted in our recent article. According to the article, “Manual methods of detection alone are ineffective at solving the problem, often unveiling just a fraction of cases only when it’s too late. To stay ahead of a severe problem, employers need automated risk screening and ongoing monitoring whenever possible.”

Fraudulent activity causes an estimated 5% of corporate gross revenue losses worldwide and, if left unchecked, fraud can permeate corporate cultures. Vcheck Global has helped its clients not only identify potential and inherent risks, but also helped clients establish successful programs that detect and prevent suspected fraud. Source inquiries, a service Vcheck Global has invested in significantly to support businesses in protecting their coffers and reputations, go beyond simple searches for risk and can help bring to light potentially shady dealings—including potential long-term implications for the business.

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