Business crime is a major problem for UK businesses facing threats ranging from theft and property damage to fraud and cyber-attacks. The costs suffered by firms as a result of these crimes run into the billions every year. Here we take a look at some of the most common risks and ask what businesses can do to protect themselves.
Counting the cost
The financial cost of crime incurred by UK businesses on an annual basis is exorbitant.
Traditional crime, including robbery and criminal damage, costs nearly £17 billion a year, a number that rises even higher when indirect costs such as store closures and staff absences are factored in. In addition, cybercrime is a major risk to modern, connected businesses. Small businesses alone suffer an average of almost 10,000 attacks a day, at an annual cost of £4.5 billion, according to the Federation of Small Businesses (FSB). Phishing attempts are the most frequent type of attack, followed by malware, fraudulent payment requests and ransomware.
However, both the numbers for physical and cybercrime pale beside the estimated £130 billion in losses incurred annually as a result of fraud, according to the Centre for Counter Fraud Studies (CCFS) at the University of Portsmouth.
Tackling business crime
Traditional methods remain the best way of tackling traditional business crimes, according to the FSB. The business group recently urged the government to increase police numbers, as a 'critical step' in helping to prevent and investigate business crime. The FSB also called for the Home Office to link funding to the 'proper resourcing of business crime'.
Businesses can play their part be ensuring crimes are reported to the police. They should also review their physical security measures and business processes to make sure they are robust.
The implementation of stringent new data laws, which form the General Data Protection Regulation (GDPR), have helped to reduce cyber security breaches. However, the government is still urging business leaders to 'do more' in order to protect their firms from cyber-attacks and cybercrime. Businesses are being encouraged to follow the 'ten steps to cyber security' guidance, which can be found on the National Cyber Security Centre (NCSC) website.
Although it is impossible to eliminate the threat completely, there are steps all businesses can take to defend themselves. It is vital to ensure anti-virus software is up-to-date, and that passwords are strong and regularly updated. Also, firms should have clear policies on the usage of both personal and business devices. Despite the frequency of attacks, over a third of small firms have not yet installed security software, and almost half do not regularly update their software.
Although the costs of fraud are enormous, it is possible for businesses to significantly reduce them. Collectively, reducing fraud losses by 40% would 'free up more than £76 billion each year', says the CCFS.
At present, organisations adopt a reactive approach to fraud, and only look to tackle it once it has taken place, and losses have already occurred, the CCFS found. Instead, firms should view fraud as a business cost – by understanding the nature and scale of the cost, they can help to reduce its extent.
In addition, the CCFS says working to measure losses is highly cost-effective. Data shows that organisations which re-measure the same area of expenditure have consistently lower loss rates. The NHS, for example, reduced its fraud losses by 60% over a seven-year period by measuring them and gathering information on their nature.
Businesses should stay up-to-date on crime-related issues and protect themselves wherever possible.