Crimes such as embezzlement, fraud and dishonesty cost British businesses more than £40billion last year, according to new research, and the problem is getting worse.
The losses, revealed by accountants RSM Robson Rhodes, are the equivalent of £110m a day or some four per cent of the UK's domestic product.
But according to the report's author, Bill Cleghorn, a partner at RSM Robson Rhodes, the true scale of the problem could be much greater because the report only highlights known losses to businesses.
"The £40bn cost to business is staggering and could be just the tip of the iceberg. Economic crime is not just a concern for businesses - ultimately it costs us all," he said.
The biggest problems uncovered by the survey of 108 firms with a combined turnover exceeding £500bn (including 24 FTSE 100 companies) were cheque fraud and money laundering. But employee perpetrated fraud, bribery and corruption were also on the rise.
FTSE 100 companies lost more than £500m in the past year, and listed firms around £3billion. The average amount lost each year by all the firms surveyed was £1m, but the figure for FTSE 100 companies was £5m.
Many of the businesses surveyed reported annual fraud losses were running at between three and five per cent of turnover.
Eight out of ten respondents believed that crime could impact the company’s share price and more than three-quarters said that it could have a serious impact on brand image.
But while the survey found that economic crime is now a board level issue, one in three businesses only discuss economic crime once a year or less and fewer than six out of ten said that UK boards have a real understanding of the financial cost of economic crime.
According to Bill Cleghorn, the figures suggest that ‘corporate denial’ was rife.
"Businesses need to take the risks posed more seriously," he said. "They need to put in place effective systems and controls to prevent it, identify material losses and take action to recover those losses."
Astonishingly, although companies said that they expected economic crime to increase during the next three years, more than a quarter do not have insurance to protect them from the financial implications of fraud.
The RSM Robson Rhodes report comes only months after Detective Chief Superintendent Ken Farrow, who heads the economic crime unit at the City of London Police, warned that gangs of organised criminals were infiltrating Britain's banking industry and blackmailing employees to obtain customer account details.
Another survey earlier this year found that almost four out of ten small business owners view the possibility of fraud – particularly being ripped off by one of their own employees - as the single biggest threat to their company.
Unsurprisingly, half of the firms surveyed felt that the government should do more to prevent economic crime and supported the introduction next year of specialist units to conduct investigations and prosecutions.
