Working from home blamed for fraud increase

More than eight in ten mid-sized businesses in the UK experienced fraud in 2021, up from 60 per cent the year before, research has found.

The frauds cost the affected companies an average of £223,000, down from £245,000 in 2020. Businesses in professional services, leisure and finance were among those hit hardest.

Cyberattacks were one of the most prevalent forms of fraud, with almost a third of respondents reporting security breaches over the 12 months.

The survey of 500 mid-sized companies by BDO, the accountancy firm, found that employees were often at fault: 38 per cent of frauds involved collusion between outsiders and employees, while more than a quarter were committed against companies solely by their own employees.

The move to working from home during the pandemic was cited by many as a key factor in rise of fraud last year.

Almost 90 per cent of the business owners and directors believed that their company had become more exposed to fraud since 2020. Despite this, the majority admitted that they had done little to mitigate fraud, with 63 per cent saying that they had not implemented awareness training programmes for their employees last year.

Kaley Crossthwaite, head of fraud at BDO, said: “Disruption wrought by the pandemic . . . has magnified the risk for businesses. The increasingly sophisticated and opportunistic tactics being developed by fraudsters have also outpaced the protections being implemented by many firms.”

She suggested that businesses “pay particular attention to robust internal controls, including strengthening their fraud risk management programmes to lessen their exposure to financial crime”.