Hospitality sector ‘incredibly vulnerable to fraud’
Risk management firm Capcon analysed the Association of Certified Fraud Examiners 2022 Report on Occupational Fraud, which was an examination of workplace fraud.
The report revealed a typical fraud case will cause a loss of £6,800 a month and last a year before it is detected.
Theft, also known as asset misappropriation, was the most common type of fraud, accounting for 86% of cases but, it had the least financial impact with a median loss of £82,000.
Many opportunities
It went on to say this type of fraud is relevant for the sector where the are many opportunities for theft at all scales.
The least common was financial statement fraud schemes but these constituted the highest median loss of £486,000. While rare, this type of fraud can do ‘untold’ damage to a company, according to the report.
It claimed the nature of the hospitality sector has always left it open to fraudulent behaviour from small-scale skimming by bar staff up to large-scale fraud at an executive level.
When it comes to the recovery of fraud losses, the report found at least 40% of businesses overall did not recover any of their funds.
Anti-fraud initiatives
For Western Europe firms, just one in 10 (11%) recovered all losses, about a third (32%) recovered some and more than half (54%) didn’t recover any losses.
The report advised to have robust anti-fraud procedures in place to minimise losses. It also surveyed the forms of anti-fraud controls common in Western Europe.
The most common way was an external audit of financial statements (90%), followed by having a code of conduct (84%) and management certification of financial statements (78%).
At the other end of the survey, 7% said they used whistle-blower reward schemes, a quarter (25%) used mandatory vacation/job rotation and 40% have surprise audits.
