14 Jul 2016 11:32 AM

I recently attended an ACFE (Association of Certified Fraud Examiners) exam course in London where I encountered this arresting little sound bite. It is merely an observation based on some interesting facts about fraud trends. I cannot claim the credit for the soundbite; it comes courtesy of the trainer that particular day, Jamas Hodivala, Barrister whose chambers are 2 Bedford Row. He was commenting on the fact that statistically the most likely person to commit fraud against your organisation is male (in fact, in Western Europe between January 2014 and October 2015 79% of the reported frauds analysed were perpetrated by men. Worldwide it was 69%).

There is a school of thought that hypothesises that perhaps this is a latent hangover from our prehistoric past where man was the hunter gatherer and had to provide through hunting. Fast forward to the modern era and today’s hunter gatherers now provide through bringing home the bacon via their paycheques and this primeval urge to provide leads some to be tempted to commit fraud against their employer or other organisations in order to live up to these deep rooted instincts. A rather large leap of faith I’m sure you’ll agree but none the less the thought of evolution being to blame for modern day fraud with the cave man mantra “Meat, Fire, Fraud” is certainly amusing enough to grab the attention of your class. And it certainly had that impact on me.

The thought of evolution taking such simple steps towards criminality is obviously a gross over simplification and indeed, the humour was not lost on us, but it still leaves an interesting question.   Why is it that men are more prevalent fraudsters? The ACFE’s Report to the Nations where these statistics come from provides a more balanced explanation; that these statistics simply reflect the distribution of jobs between men and women. In essence they are a reflection of  the problem we so often hear about of gender equality within the work force.

The analysis doesn’t stop there. The age of perpetrators is also summarised, with the majority of fraudsters (55%) being between the ages of 31 and 45. This gives me some personal cause for concern.

Firstly; I am a middle aged male; so does that mean my employer should be wearier of me and install a CCTV camera above my desk and start monitoring my emails to ensure I’m not fleecing them! At this stage of my life am I more hardwired to commit fraud than my younger and older colleagues, or the women I work with?

Secondly; and more seriously, is what these figures could be saying about our society as a whole. As already alluded to, the issue of gender equality is still an issue in today’s work environment, especially in positions of management and more senior roles. Perhaps, with more seniority and control comes greater opportunity to commit fraud and as women are still under represented in most industries at the management level this simple correlation could account for the stats.

Interestingly enough the stats also show a marked leap in the level of the fraud being committed after the age of 40. As if indicating a sort of criminal mid life crisis, the average median loss in frauds for perpetrators aged 36-40 is $100,000. Individuals pass their 40th birthday and instead of spending their savings on a Harley or a yacht, they up the anti on their younger criminal counterparts, resulting in an average median loss of $250,000! Something for me to look forward to when I reach that age!

I’m sure there are a plethora of possible explanations for these trends, all with varying degrees of likelihood and plausibility. The reality is that we can’t pin point a single reason that could explain such worldwide trends. You never know, perhaps my wife’s suggestion that women are simply cleverer than men at hiding their fraud could play a part in these trends!

In the end, regardless of what the stats tell us, as interesting as that might be, a much broader point should not be missed. Which is that fraud could be committed by anybody. We all want to trust our employees and colleagues, our suppliers and customers; but time and again you hear the stories of how it was always the most reliable person, the one you’d least expect who ended up committing the fraud! Indeed, the very same report indicates that a staggering 88% of the fraudster’s caught were first time offenders indicating that prior behaviour or attitudes has no bearing on whether one will commit a fraud.

Be aware and be savvy, I think, is what we need to take away from statistics. Yes, they make for interesting reading and often can inform useful strategies and plans to combat the problems highlighted; but never lose sight of the fact that you cannot stereotype fraud, nor the perpetrators. Everyone is influenced in different ways and with the right level of pressures and stresses in an individual’s life, there is no saying what one can be capable of. That’s not to say no longer trust anyone! That would be disastrous and is certainly no way to live life; but make sure that in a business environment you follow sensible procedures and processes to protect yourself and your organisation from fraud and hopefully when you do come across the fraudster caveman you’ll spot him or in 21% of cases, her!

If you would like to discuss setting up procedures to reduce your organisation's risk to fraud, or if you would like to talk about any aspect of fraud please call me on 01483 533119 or email jonathan.graham@alliotts.com.