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The dangers of widespread cut-backs and complacency have become apparent as a report highlights a staggering rise in fraud. Both the number and value of reported frauds is now at its highest level in almost a decade, according to BDO’s 2011 Fraud Track report.

“The fact that fraud is on the rise comes as no surprise. Unfortunately, however, it seems a growing number of businesses are either unaware of the risk or careless in managing it. That means that fraud cases which would previously have been picked up and investigated now go unrecognised,” says Jane Peters who is head of Operations at AGS Risk Solutions.

With a staggering 10% rise since 2012, the UK’s retail sector now accounts for 12% of reported fraud, with financial services suffering with 27% of fraud cases. Tax fraud accounts for the highest percentage of fraud committed with 36% of the overall share.

In total, 2011 saw 413 reported fraud cases worth, on average, £5million each. 

Simon Bevan, head of fraud at BDO LLP, said: “Organisations need to be much more proactive when it comes to preventing fraud. Too often risk teams are either too externally focused or fail to look at fraud from a financial point of view."

According to this latest report, Yorkshire and the North East were the hardest hit regions outside London – struggling with a six-fold increase in fraud.

Jane adds: “Ongoing investment in risk assessment and fraud prevention might be considered ‘unnecessary’ but the consequences of turning a blind eye and hoping for the best can be severe.”

According to Jane, fraud prevention efforts should focus on internal and external factors equally. “All too often the most serious offences are committed by rogue employees and even senior managers who have access to company accounts. Preventing fraud committed by employees, suppliers, customers and organised criminals often proves a very sound investment.”

The 2011 Fraud Track findings are based on data from all reported fraud cases over £50,000 between December 2010 and November 2011.