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the Cost of occupational Fraud
Measuring the cost of occupational fraud is an important,
yet incredibly challenging, endeavor. Arguably, the true Fraud, by its very nature, does
cost is incalculable. The inherently clandestine nature not lend itself to being scien-
of fraud means that many cases will never be revealed,
and, of those that are, the full amount of losses might not tifically observed or measured
be uncovered, quantified or reported. Consequently, any in an accurate manner. One of
measurement of occupational fraud costs will be, at best, the primary characteristics of
an estimate. Nonetheless, determining such an approxi- fraud is that it is clandestine,
mation is critical to illustrate the pandemic and destruc- or hidden; almost all fraud in-
tive nature of white-collar crime.
volves the attempted conceal-
We asked each CFE who participated in our survey to pro- ment of the crime.
vide his or her best estimate of the percentage of annual
revenues that the typical organization loses to fraud in a
given year. The median response was that the average
organization annually loses 5% of its revenues to fraud.
Applying this percentage to the 2009 estimated Gross
World Product of $58.07 trillion would result in a pro-
1
jected total global fraud loss of more than $2.9 trillion.
Readers should note that this estimate is based solely
on the opinions of 1,843 anti-fraud experts, rather than
any specific data or factual observations; accordingly, it
should not be interpreted as a literal representation of the
worldwide cost of occupational fraud. However, because
there is no way to precisely calculate the size of global The typical organization loses 5% of its
fraud losses, the best estimate of anti-fraud profession- annual revenues to occupational fraud.
als with a frontline view of the problem may be as reli-
able a measure as we are able to make. In any event, it 1 United States Central Intelligence Agency, The World Factbook (https://www.cia.gov/
is undeniable that the overall cost of occupational fraud library/publications/the-world-factbook/geos/xx.html)
is immense, certainly costing organizations hundreds of
billions or trillions of dollars each year.
8 | 2010 RepoRt to the NAtioNs ON OccuPATIONAl FRAUD ANd AbuSE