Procurement Fraud Statistics 2022 — 18 Key Figures
Procurement fraud statistics allow you to know how often companies still lose money through fraudulent acts in procurement in 2022. However, what are these statistics?
In this article, we will show you the figures regarding procurement fraud in 2022. We will also show you some of the factors why people commit fraudulent acts in procurement nowadays.
Once you finish reading this article, you will know the latest statistics about procurement fraud. Thus, it will allow you to know what to do in order for you to avoid procurement fraud in your profession or your company.
Cyber-enabled Economic Crime
As many things become digitized, many people are also taking advantage of this through cybercrime. Cybercrime stood out among 19 categories of economic crime as the most infamous and disruptive experience over the past two years around the world.
In the United States, about 22% of respondents surveyed by PwC experienced cybercrime for the first time which is a result of disruption from the pandemic and responses to it, including the quick shifting of all things into digital.
Therefore, companies need to find new ways to connect disjointed departments and identify risk scenarios across various functions. Cyber frauds and threats are usually handled by different departments that do not work or communicate with one another about risks, which cyber criminals know.
Procurement Fraud Increased Significantly During COVID-19
Social instability and economic downturn can pave the way for fraud and financial crimes. This was seen during the pandemic which many organizations have encountered.
Remoted work lowered the risks of asset misappropriation. However, it increased digital security issues.
Physically attacking employees or blackmailing has become the new concern as companies allow access to corporate data from the comfort of their employees’ homes. Thus, companies need to increase their awareness of this emerging risk.
External Threats on The Rise
A survey by PwC has found a disturbing trend among fraud and economic crimes in 2022. External entities that cannot be easily influenced or controlled are becoming stronger now.
The biggest problem with external threats or fraudsters is that they are immune to traditional fraud prevention tools such as training, code of conduct, and investigations which forced companies to seek legal action.
For years, the main focus of fraud and theft in businesses was internal. However, due to the trend in external threats, companies may have to shift their focus to consider external threats as well.
New Threats to Become a Bigger Concern in The Future
Although consumer fraud and cybercrime remain worrisome to businesses, new threats are now getting enough attention and can become a bigger problem in the future.
Other emerging threats include environmental, social, and governance (ESG) fraud and supply chain fraud. The number of frauds is increasing in the coming years as sustainability becomes an essential global concept and supply chain disruptions continue to hurt international trade.
18 Procurement Fraud Statistical FiguresThat You Should Know
1. It is estimated that almost $2 trillion is lost each year due to procurement fraud or 4 to 8% of an organization’s procurement spending.
2. The average organization has reported losing at least 5% of its annual revenue to fraud each year. Thus, causing a median loss of $117,000 before being detected.
3. Several studies have shown that 50% of fraudsters are motivated by either benefits or monetary rewards by committing a crime.
4. A survey of 1,296 business leaders across 53 countries has reported that cybercrime, customer fraud, and asset misappropriation were the most common crimes experienced by organizations regardless of their revenue.
5. Cybercrime is the most disruptive fraud experienced by many organizations in 2022.
6. 52% of large companies have experienced fraud in the last 2 years which cost them a lot.
7. Almost 1 out of five organizations that were surveyed said that their most disruptive incident has cost more than $50 million.
8. 42% of businesses with revenue between $1 billion and $10 billion have experienced cybercrime.
9. Nearly half of the 31% of energy, utilities, and resources (EU&R) has experienced procurement fraud.
10. According to a report, more than 70% of those encountering fraud experienced new incidents during the pandemic.
11. Almost 15% of organizations experienced disinformation fraud in the past 24 months.
12. Almost 70% of companies that experienced fraud said that the most disruptive incident came from outside or through collusion between internal and external sources.
13. Threats from hackers and organized crime have risen in the past 2 years.
14. About ⅓ of external cases were from hackers and 285 were from organized crime groups.
15. Only 6% of organizations reported encountering anti-embargo fraud in the last 2 years.
16. 8% of companies that were surveyed have reported experiencing ESG fraud.
17. The top concealment method used by fraudsters is through the creation of fraudulent physical documents which is at 39% of all the cases studied.
18. 85% of fraudsters displayed at least one behavioral red flag which includes living beyond one’s means, unusual closeness with the vendor, and financial difficulties.
+ What is procurement fraud?
It is defined as illegal acts that intend to manipulate the procurement process.
+ Why does procurement fraud happen?
There are three main reasons why employees commit procurement fraud:1.) financial instability; 2.) there is an opportunity for fraud; 3.) poorly compensated.
+ What is cybercrime?
It is a criminal activity that is carried out by means of a computer, networked device, or network.
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