The Next Wave of Workplace Fraud

Executive summary

Insider fraud is more common than many might think. Accounting abuses, egregious business practices, vendor favoritism, bribery and corruption are just some of the wrongdoings that have come to light over the course of 2023.

Yet while corporate fraud cases are on the rise, the percentage of those reported has declined. In fact, the true incidence of insider fraud is thought to be massively underreported.

When high-profile fraudulent acts come to light, it's often surprising how long the misdeeds have gone unnoticed and unchallenged.

Among the trends to watch out for in 2024 is the growing sophistication of artificial intelligence (AI)-leveraged social engineering attacks and the rise in fraud related to supply chains and environment, social and governance (ESG).

Meanwhile, regulatory pressures are growing. Supervisors are introducing new rules, with a greater onus on companies to tackle crime within their midst.

Insights

Corporate fraud is thought to erode 1.6% of equity value annually.*
There's typically a time lag between a fraudulent act being perpetrated and the crime being discovered, with the true impact of crimes committed in lockdown only now coming to light.
The onus is on companies to maintain strict anti-fraud controls. Supervisors are introducing new rules, requiring companies to do more to tackle crime in their midst.
Trends to watch for include more sophisticated, AI-driven social engineering, ESG and supply chain fraud.

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The issue with crime is that there's often a lag of two to three years between someone perpetrating a scheme and it being discovered.

Miranda DesPain, Senior Vice President, Gallagher

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Published February 2024

Sources

*Dyck.I. J. Alexander, Adair Morse and Luigi Zingales. "How Pervasive Is Corporate Fraud?" SSRN, 2 Oct 2023.

Disclaimer

CONDITIONS AND LIMITATIONS Gallagher's global operations, including a network of correspondent brokers and consultants, offers client-service capabilities in more than 130 countries around the world. This report and supporting information is not intended to provide legal or financial advice and reflects our understanding as of February 2024. It should not be regarded as a comprehensive statement of the law and/or market practice in the regions covered. You should not act upon information in this publication nor determine not to act, without first seeking specific legal and/or specialist insurance and risk management expertise. Should you require advice about your specific insurance arrangements or claim circumstances, please contact your Gallagher account representative.