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As fraudsters and scammers become increasingly sophisticated, MNP recently ran a survey of small to large business owners across Canada to gauge their perception of and experience with fraud. The results uncovered an interesting disconnect between reality and perception.
The survey, conducted by industry-leading Ipsos, reveals what could be a dangerous combination of overconfidence and naiveté, leaving many businesses operating with a false sense of security.
Half of the 1,100 businesses polled say they suspect or know for certain their business had experienced fraud or scams in the past year. Yet an overwhelming majority, 80 per cent, of small business owners and C-suite executives are reasonably confident about their workplace’s ability to detect and prevent fraud or scams. Plus, they tend to see it as well equipped to deal with fraud when it occurs.
Either they mistakenly believe that they have the right prevention protocols in place, or they feel that their business isn’t a target. This kind of ‘it won’t happen to me’ optimism puts the advantage in the hands of criminals and makes Canadian businesses tremendously vulnerable.
Only minority are “very confident” about their ability to detect and prevent fraud, suggesting room for improvement among most. A majority also tend to see their business as taking a proactive approach to fraud and scam prevention.
Dig a little deeper, however, and it soon emerges that fraud is a reality of doing business for many. Plenty have first-hand experience with fraud or scams, including from external hackers, and are increasingly concerned about exposure to various types of fraud or theft.
Those with first-hand experience of business fraud or scams are all too aware of the cost involved. Lost revenue and lost time are realities reported by victims of business fraud who completed the survey.
While most respondents have some form of fraud prevention strategy in place at their work, those who have experienced an external hack or fraud from any source are significantly more likely to invest in a whistleblower hotline, compared to those not exposed to fraud or hacks.
Exposure to business fraud makes most SBOs and executives re-think their approach to prevention, with more than eight in ten (84%) saying they’d have done something differently if they could. While better policies and procedures top the wish list, many are open to looking outside their company for help.
Only one in ten (10%) fraud victims say they had the proper policies and procedures in place to deal with it when it occurred, and just 6% say they would maintain a “deal with it as it happens” approach without trying anything new.
Protecting your business against fraud plays an integral role in protecting your bottom line and reputation, particularly as fraud incidents climb in North America. Taking a realistic view and proactive stance will go far in keeping your business’ defenses strong.
Greg Draper, MBA, DIFA, FCPA, FCGA, CFE, ICD.D, is Vice President of MNP’s Valuations, Forensics and Litigation Support Services.
About the Survey
The survey was conducted by Ipsos on behalf of MNP LLP between January 17 and January 26, 2017. For this survey, Ipsos conducted a quantitative online survey of two distinct sample groups: Small Business Owners (SBOs) of businesses of 5-99 employees (n=1,000); and C-Suite Executives at businesses of 100+ employees (n=100).
The precision of Ipsos online surveys are calculated via a credibility interval. In this case, the total sample is considered accurate to within +/- 3.4 percentage points, 19 times out of 20, had all Canadian SBOs and C-suite executive been surveyed.
Related Topics:Risk Series; Fraud
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