Has fraud become endemic? According to a study by PWC and the DFCG (Association des Directeurs Financiers et de Contrôle de Gestion), seven out of ten French companies will have suffered at least one fraud attempt by 2022. This figure rises to nine out of ten for companies with sales in excess of €100 million. Despite tighter regulations, particularly in the financial sector, fraud and economic crime rates remain high: in the last 24 months, 41% of companies worldwide have been victims, as revealed by PWC's Global Economic Crime Survey 2024. The Direction de l'information légale et administrative de la République française, meanwhile, estimates that 63% of French companies will have suffered at least one fraud attempt in 2023.
Diversified risks
The typology of frauds is very broad: misappropriation of assets, counterfeiting, swindles, accounting frauds (false suppliers, false RIBs, President's fraud), corruption, information theft, phishing... And the costs are enormous for the victims: according to the ACFE(Association of Certified Fraud Examiners), at international level, this represents the equivalent of 5% of company sales, with an average loss of 1.7 million dollars. If we add tax and social security fraud(20 billion euros a year in France alone), the phenomenon has become very worrying.
Challenges, opportunities, risks: fraudsters' three focal points
A fraudster's intentions are based on three factors, which are common to all types of crime: the stakes involved, the opportunity and the level of risk.
The stakes may be financial, but they may also involve identity theft or illicit access to confidential information. This explains, for example, why large companies are targeted more often (nine out of ten according to the PWC-DFCG study, compared with seven out of ten on average).
Opportunity, which lies in the ability to execute a fraudulent modus operandi, whether easy or more difficult to achieve.
The level of risk, which determines the likelihood of the fraudster being identified and convicted. If a financial stake is combined with an opportunity/ease to defraud and there is little risk, the temptation to act will be great.
When it comes to fraud, five assumptions apply:
- Every system or process has at least one flaw (technical, human, organizational, etc.).
- This flaw is likely to be discovered in the longer or shorter term, either internally (employees, consultants) or externally (subcontractors, hackers, competitors...).
- A potential flaw will be discovered sooner or later, but you never know when.
- Anyone who has access to this flaw (internally or externally) will be tempted to use it.
- If the risks are low, this loophole will be exploited.
For this reason, internal frauds are significant, accounting for around half of all cases.
AI, a major threat that accelerates fraud
With the rise of artificial intelligence, fraud is taking on a whole new dimension, becoming industrialized on a massive scale. The title of Allianz's study says it all: "Artificially intelligent fraudsters". According to Deloitte, fraud losses involving AI-generated deepfakes amounted to $12 billion in 2023 in the USA, a figure that could climb to $40 billion by 2027. AI enables cybercriminals to reach a large number of victims with a minimum of resources.
Prevention, detection, reaction: the three pillars of the fight against fraud
Even if the situation gives cause for concern, it is entirely possible to reduce fraud through a strategy built around three complementary pillars: prevention, detection and reaction.
Step 1: Act before it's too late: prevent fraud collectively
Prevention begins with clear communication and active awareness-raising among all stakeholders. This involves training them in fraud techniques, the right reflexes to adopt in the face of phishing attempts, compliance requirements, and the importance of the fight against money laundering. To be effective, this approach must be part of a genuine corporate culture focused on risk management and prevention. The development of ethical charters and codes of conduct is an essential lever in this transformation. Prevention also means investing: in risk analysis, in robust cybersecurity tools, particularly for access control. It's also crucial to structure processes in such a way that no single person has complete control over them.
Objective: to make fraud more difficult
Step 2: Stay one step ahead: spot fraud at an early stage
Detection relies on several levers: regular audits of processes, financial transactions and access to information systems. It also requires solid skills in internal auditing and data analysis. But the crux of the matter remains the implementation of a real-time alert system, capable of identifying any suspicious activity: anomalies in customer or supplier accounts, unusual transfers, inconsistencies in RIBs, etc. This is often where the problem arises. This is often where the problem lies: many organizations are too slow to react. According to the ACFE, fraud remains active for an average of twelve months before it is detected. So much time for the attacker to act with complete discretion.
Objective: to make fraud more risky
Step 3: Damage limitation: the key to an effective anti-fraud response
Once fraud has been detected, the response must be rapid, structured and exemplary. This limits the consequences, both direct (financial losses) and indirect (legal impact, organizational reputation, operating losses). An effective response requires crisis management capabilities and the ability to investigate operating methods.
Objective: limit damage to restore confidence (among customers, employees, partners...) and show determination to eradicate fraud and attempted fraud.
To meet these three fundamental needs (prevention, detection, reaction), it is essential to equip yourself with the right software solutions, offering the relevant anti-fraud functionalities:
- Preventing fraud: while prevention relies on raising awareness and changing the corporate culture, it is essential to measure the degree of compliance, for example with the AP Scoring. Using powerful algorithms, it analyzes customer data and financial transactions to identify the level of risk.
- Detecting fraud: the solution AP Monitoring solution enables suspicious transactions to be monitored and reported in real time. As a result, warning signals no longer go unnoticed.
- React to fraud: with real-time identification of suspicious transactions fromAP Scoring andAP Monitoringwhen fraud is detected, every minute counts. The faster you react, the more limited the damage. That's what often distinguishes well-prepared companies from those that sail blind. With the right tools and clear processes, you can act quickly, contain the attack... and avoid the worst.
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