Risk Trends 2025 and Beyond: Fraud and Corruption
Risk Trends 2025 and Beyond: Fraud and Corruption
Fraud is evolving rapidly, with schemes becoming more sophisticated and harder to detect. From third-party vendors misappropriating assets to bribery, kickbacks, and conflicts of interest, businesses face a range of internal and external threats.
Are you prepared to detect and prevent these growing risks? Strengthen your defenses now.
Fraud issues have doubled in Canada over the last decade, have you doubled the effectiveness of your fraud risk assessment along with your preventative and detective controls?
Fraud cases have nearly doubled over the past decade, surging from 79,000 in 2012 to 150,000 in 2022, according to Statistics Canada. This dramatic increase underscores the growing sophistication of fraudsters, who are now leveraging cutting-edge technology like artificial intelligence (AI) to enhance their illicit activities.
How can you protect your business and your future?
By knowing and proactively addressing fraud risk trends.
Consider third-party vendors and service providers who may have the opportunity to steal or misuse company funds, inventory, or other assets for personal gain. This asset misappropriation could look like embezzling money, or even something like selling company products for personal profit. These actions erode trust and, potentially, the financial well-being of an organization.
Alongside this, bribery and kickbacks present another potential danger. This involves offering, soliciting, or accepting illicit payments to influence decisions, contracts, or regulatory outcomes.
As we dive deeper, conflicts of interest add another layer of complexity. When employees or executives engage in activities or relationships that could compromise their objectivity, it can lead to biased decisions that aren’t in the best interest of the company.
The new age of fraud trends
The digital age brings its own set of risks, with cyber fraud being a major threat. Enhanced by AI, cyber fraud includes phishing, ransomware, identity theft, and payment fraud. Consider a cyber criminal hacking into company systems to steal sensitive information or tricking employees into making unauthorized payments. In 2024, cases of deepfake AI fraud skyrocketed — this involves using AI to look and sound like an actual person and then requesting a payment.
As we navigate 2024 and move into 2025, vendor fraud becomes a growing concern. This type of fraud occurs when vendors work with an organization’s employees to artificially inflate prices, deliver sub-standard goods or services, or give kickbacks in exchange for business. These fraudulent activities can be expensive and damaging to reputations and bottom lines.
Why stop there? Here are other risks to consider:
- Financial statement fraud
- Employee fraud
- Insider trading
- Money laundering
- Non-compliance with anti-corruption laws
Questions to consider:
- How aware are your leaders of the most common types of fraud and corruption techniques being used today?
- Are your leaders aware of how to effectively prevent and detect these issues?
- Is your organization aware of the most advanced crimes committed using artificial intelligence, like deepfake impersonation tools?
- Do you have a formal and effective internal controls framework in place? Has it been tested?
