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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
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