Businesses shouldn’t lose sight of fraud and corruption risks during disruption.
The impacts on consumer spending and customer preferences due to COVID-19 have led to an increase in the risk of fraud and corruption occuring in businesses operating in the consumer market sector. Increased financial pressures have, and will continue to hit consumers, and wrongdoers may look to seize opportunties created by the uncertainity.
While businesses haven’t seen impacts like the current experiences created by COVID-19 before, we can seek to draw lessons and insights from previous economic downturns, such as the 2007/8 Global Financial Crisis (GFC).
The current economic climate is providing similar, and potentially even more difficult challenges than the GFC, and in the consumer markets sector, the opportunity for fraud and corruption is high. Not only is there intense pressure on suppliers and constrained supply chains we examined earlier creating these challenges, but the financial pressure individuals are under often motivates fraudulent activity. This increased motivation, coupled with disruption of business controls, creates the perfect environment for increased fraud and corruption.
The current situation leads to an increase in the following risks for the consumer markets sector:
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