FROM THE REPORT TO THE NATIONS
Anti-fraud professionals know just how devastating a fraud can be to its victims. But they are not the only ones who benefit from insight into the amount of damage that fraud causes organizations and their stakeholders, as shown in the ACFE's 2018 Report to the Nations. Business leaders need to understand how much is at stake as they assess their risks and make resource-allocation decisions. Regulators need to determine where to focus their enforcement efforts. Investors and customers need to make informed decisions about where to direct their own money. And the media desires context and direction for helping to raise awareness of the issue to the general public.
Determining total fraud losses — whether globally, regionally, by industry, or even within a specific organization — is outside the primary scope of our study. Instead, we focus on analyzing known data to better understand the risks posed by occupational fraud. To that end, we examined the losses incurred in the actual cases of fraud reported to us to learn about how fraud affects its victims.
The total loss caused by the cases in our study exceeded $7.1 billion. While we do not know the total number of cases of fraud that occurred globally during our study period, it is safe to assume that the 2,690 cases included in our study represent only a tiny fraction of the frauds committed against organizations worldwide during that time. Thus, the $7.1 billion in known losses — while staggering on its own — does not come close to representing the total amount lost to fraud. The true global cost of fraud is likely magnitudes higher, especially when factoring in the indirect costs, such as reputational harm and loss of business during the aftermath of a scandal.
The mean, or average, loss due to the frauds in our study was $2.75 million, which is also an enormous amount when considering how much damage such a loss represents to most organizations.
However, due to the presence of several very large frauds in our data, this amount likely does not illustrate the typical fraud case. Consequently, throughout this report we use median loss calculations, rather than mean, to provide a more accurate representation of how fraud typically affects organizations.
The median loss for all cases in our study was $130,000. While 55% caused less than $200,000 in financial damage, more than one-fifth resulted in a loss of at least $1 million.
Throughout the report, we further examine these losses through different lenses, based on the specific schemes, victim organizations, perpetrators involved, and other factors. We hope that our research into and analysis of these cases helps shed additional light on the way that fraud impacts the global business community and its stakeholders.
Read more about the cost of fraud and download the full report at ACFE.com/RTTN.