ECONOMY: The Republic may be more vulnerable to fraud than most countries because there is no comprehensive system in place for the measurement and detection of fraud in the Irish economy, Mr Peter Dorrington, head of fraud UK and Ireland at business intelligence and data warehousing company SAS, warned yesterday.
Fraud poses a serious threat to the Irish economy and, based on experiences of other countries, it could be costing from 2 to 3 per cent of GDP, he said.
"Ireland continues to have a false sense of security about how much fraud is impacting companies, as the size of the problem has not yet been quantified," he said.
"It will take a collaborative approach from Government and the private sector to address this issue.
"Incidents of fraud are occurring at a growing rate in all markets across the globe and clearly Ireland is not immune from this trend. In fact, with its lack of attention on the issue, Ireland is in danger of becoming a market that is particularly vulnerable to the actions of fraudsters."
Mr Dorrington defined fraud as any deliberate attempt by someone - including customers, employees or other companies - to obtain any advantage in money or goods to which they were not entitled.
"At the end of the day, this is theft but it is often downplayed because it is seen as a victimless crime or a soft crime," he said.
Another problem in quantifying the extent of fraud is that much of it goes unreported, according to Mr Dorrington.
"It's not in a commercial organisation's best interest to report fraud as it hits the share price and the reputation of the company. It is often put under the guise of a bad debt," he said.
SAS said fraud was increasing globally and a greater reliance on technology in business transactions and identity-verification would enable greater scope for fraud.
It has upgraded its estimate for total British annual fraud from £14 billion sterling (€21.75 billion) to £18 billion sterling.
According to SAS, a financial company that achieves a 1 per cent reduction in costs through fraud prevention will enjoy a 10 per cent jump in profit margins.
"When an economy is doing well, a cost of 1 per cent to 2 per cent is acceptable, but when margins are squeezed that 1 per cent to 2 per cent can account for 20 per cent to 30 per cent of net profits," said Mr Dorrington.
SAS, which has developed a number of frauddetection and prevention solutions, has worked with companies such as Amazon.com in the US and eFunds, Equifax and Barclays Bank in Britain.
Mr Dorrington was in the Republic yesterday meeting 40 representatives from the main banks here to discuss methods to help combat, prevent or detect fraudulent behaviour.
