During the forecast period of 2019 to 2025, the global employee fraud detection market is estimated to develop at a CAGR of 9.3%. The growing awareness among enterprises about employee frauds, as well as the government’s rigorous rules, are the primary reasons driving the growth of the employee fraud detection market.
According to the National Fraud Authority, the cost of occupational fraud and error in the United Kingdom exceeds GBP 19 billion per year.Furthermore, according to the Association of Certified Fraud Examiners (ACFE), the average loss incurred by occupational fraud is USD 140,000. As a result, the rising number of incidences of employee fraud is likely to drive the growth of the employee fraud detection market over the forecast period.
Organizations are putting in place a variety of procedures to detect and prevent employee fraud. For example, in 2017, the City of Austin in the United States introduced the FraudAvenger employee fraud detection software, which helped the organisation save USD 2.5 million in the first year. Furthermore, SAP SE developed a new product called SAP Fraud Management in 2018 to assist enterprises in detecting, investigating, and preventing fraud. During the projection period, such initiatives are likely to generate a need for employee fraud detection solutions and services.
Employee fraud detection is classified as a market by component, organisation size, deployment type, industry vertical, and geography. The market is divided into two components: solutions and services. In 2018, the solution had a greater market share and is predicted to grow at a faster CAGR during the forecast period. During the projected period, the growing requirement for effective employee fraud detection solutions is expected to fuel the expansion of this category.
The employee fraud detection market is divided into two segments based on organisation size: major organisations and small and medium companies. During the projection period, the big enterprise category is expected to increase at a faster CAGR. During the projected period, the increasing incidences of employee fraud in large businesses are expected to drive the expansion of this category.
The employee fraud detection market is divided into two segments based on deployment type: on-premises and cloud. During the projection period, the cloud segment is expected to increase at a faster CAGR. Cloud computing is becoming more popular.
2. Growing Incidence of Employee Fraud
The average loss to firms due to employee fraud is more than $7,000 per year, according to the Association of Certified Fraud Examiners (ACFE). Employee fraud is becoming more common as firms struggle to keep up with the changing business landscape.
Employees may commit fraud for a variety of reasons, including financial need, personal problems, or simply opportunity. Many employees are under financial stress as a result of the current status of the economy. In order to make ends meet, employees may take shortcuts or conduct fraud.
Organizations must be aware of the indicators of employee fraud and take preventative measures. Some warning indicators to check for are:
Unexpected or unexplained behavioural changes
Surprising financial activities
Modifications to work habits
Absence of transparency
If you believe that an employee is committing fraud, you must take action right away. You should conduct an investigation and, if necessary, take disciplinary action. Employee fraud can have a tremendous impact on your firm, so it is critical to take preventative measures.
3. Increased Demand for Advanced Fraud Detection Solutions
Fraud is a severe problem that affects all types of businesses. According to the Association of Certified Fraud Examiners (ACFE), firms throughout the world lose an estimated 5% of their annual revenues to fraud.
There are many various sorts of fraud, but employee fraud is one of the most widespread and costly. Employee fraud can manifest itself in a variety of ways, ranging from simple theft to complicated conspiracies involving numerous employees and outsiders.
Fortunately, there are a variety of modern fraud detection tools available to assist firms in detecting and preventing employee fraud. Here are three areas where enhanced fraud detection technologies are in high demand:
1. rising employee fraud costs
Businesses are under increasing pressure to invest in advanced fraud detection technologies as the cost of employee fraud continues to rise. The ACFE’s research states that the average loss caused by employee fraud is $140,000. This is a huge rise over the previous ACFE report’s median loss of $50,000.
2. Employee fraud is becoming more sophisticated.
Employees’ fraud methods are becoming increasingly complex. They take advantage of technology and frequently collaborate with others to carry out their crimes. As a result, businesses must deploy innovative fraud detection technologies capable of keeping up with the ever-changing world of employee fraud.
Employee fraud has a negative influence on firms.
Employee fraud can have major consequences for firms. In addition to direct cash losses, businesses may suffer reputational harm, legal liabilities, and a loss of customer trust.Advanced fraud detection tools can assist firms in avoiding these harmful outcomes.
Investing in effective fraud detection solutions is critical for all businesses. Employee fraud’s escalating cost, increasing sophistication, and bad impact on enterprises are all compelling reasons to engage in these solutions.
4. Market Participants in the Employee Fraud Detection Market
Employee fraud can take numerous forms, but the most prevalent are expense reimbursement fraud, payroll fraud, and time theft. Employee fraud may be costly to firms, so it’s critical to have detection and prevention mechanisms in place.
Employee fraud detection systems are available from a variety of suppliers. Here are four of the market’s major players:
1. Fraud detection
FraudDetect is a method for detecting and preventing fraud that employs machine learning to detect suspicious behavior. It may detect several types of employee fraud, such as expense reimbursement fraud, payroll fraud, and time theft.
Another machine learning-based fraud detection product is FraudSense. It includes real-time warnings, behaviour analysis, and a fraud risk score to assist firms in detecting and preventing employee fraud.
Paychex is a payroll and human resources system that includes a number of anti-fraud features. Employee background checks, identity verification, and a fraud risk assessment are among them.
TimeTec is a time and attendance system that helps to prevent time theft.It includes fingerprint and facial recognition, as well as real-time warnings and thorough reports.
Employee fraud is a severe problem that can have serious consequences for corporations. These four suppliers provide solutions to assist businesses in detecting and preventing employee fraud.
5. Prospects for the Employee Fraud Detection Market
The global employee fraud detection market is estimated to develop at a CAGR of more than 14% between 2019 and 2025.
Employee fraud costs businesses millions of dollars every year. Employee fraud is, in fact, one of the most common types of fraud, and it can be disastrous to a company’s bottom line. Fortunately, employers can take a number of actions to avoid and detect employee fraud.
Implementing a comprehensive background check procedure is one of the most effective strategies to prevent employment fraud. Background checks can assist in identifying people who have a history of fraud or other criminal conduct. Organizations should also consider deploying fraud detection software. This software can assist in detecting suspicious behaviour and flagging it for further investigation.
Another important step that firms should take to combat employee fraud is to foster an ethical culture. This can be accomplished by enacting policies and practises that encourage honesty and integrity. Additionally, firms should train their staff on how to detect and report fraud.
Organizations that are successful in preventing employee fraud can save a substantial amount of money. In fact, it is predicted that having an effective fraud protection programme can save firms up to 5% of their yearly income. Furthermore, firms that are successful in preventing employee fraud can improve their reputation and gain the trust of their stakeholders.