Fraud Author Tracy Coenen

If you’ve been living under a rock for the last several years, you might not have heard yet that fraud is big business. Companies are most at risk of fraud from their employees, since the employees have access to information and assets.

Each year, the average company loses 6 percent of its revenues to internal fraud, which is also commonly known as employee theft, fidelity losses, or occupational fraud. At a company with annual sales of $100 million, that means $6 million dollars is likely walking out the door each year. Ask any business owner who has dealt with the incredible shrinking margins, and you will find out that 6 percent can be the difference between the success and failure of a company.

Executives tell themselves that their company isn’t the norm. They do better than average. They certainly haven’t been a victim of internal fraud to the tune of 6 percent of revenues. The sad truth is that they don’t know exactly how much has been stolen from their companies because they aren’t aware of all the fraudulent activities committed. Six percent is an average level of fraud for a company, and it would be wise for executives to take this number seriously.

Even though management would like to believe they’re doing better than the average company, this is a dangerous trap. Thieves are always on the lookout for unprepared companies, and it shows. The annual fraud losses in the United States total approximately $660 billion, making fraud an industry of its own.