Measuring the cost of fraud: an opportunity for the new competitive advantage

Purpose – The purpose of this paper is to provide evidence, from the analysis of 132 fraud risk measurement exercises, of the average costs and rates of fraud. It advocates greater use of more accurate measurement which if monitored and repeated can secure reductions which could amount to a new competitive advantage.Design/methodology/approach – This paper has analysed 132 fraud risk measurement exercises from nine countries in a range of different sectors. Only those which assess a statistically valid sample which have sought and examined information indicating the presence of fraud, error or correctness in each case within that sample; have been completed and reported; have been externally validated; have a measurable level of statistical confidence; and have a measurable level of accuracy were included. Each exercise has been assessed to determine the percentage loss rate (PLR) and the fraud frequency rate (FFR). These data were analysed using Excel to determine average rates and further comparable dat...