Skip to content

Whistleblowing systems uncover more internal theft than Police

Whistleblowing systems deter thieves. Especially when whistleblowers uncover more internal theft than law enforcement and audits combined.

Whistleblowing system efficiancy - intelligence & risk solutions

In a recent study by PriceWaterhouseCoopers (PWC) 5400 companies were contacted in 40 countries globally. PWC found;

“Fraud remains one of the most problematic issues for business worldwide” and concluded that, “Companies could not rely on fraud controls (internal audits) to detect and deter
economic crimes.”

The study concluded that whistleblowers were responsible for 43% of fraud detection, while law enforcement and audits only found 37%. This is also backed up by the ACFE (Association of Certified Fraud Examiners) whose study found very similar results – in fact with Whistleblowers uncovering 46% of internal fraud and the police just 3%.

Whistleblowing systems reduce crime - intelligence & risk solutions

And fraud is costing UK business £158 billion annually according to a 2021 survey. Since then problematic inflation and the cost of living crisis has driven some firms to the wall. It is also impacting employees who are facing pay freezes and reducing disposable income as costs rise.

Whistleblowing systems save firms money.

In a study by Navex, over ten years of data was examined and reported upon by CNBC in the US. They found that firms with whistleblowing systems receive smaller fines when they were found to transgress regulations, when compared to firms who do not have whistleblowing procedures in place. The study also found that firms with whistleblowing systems had 6.9% fewer lawsuits against them saving untold reputational and financial damage for the firms.

Esg and whistleblowing - intelligence & risk solutions

The study also claims that with improved ESG principles running through firms with whistleblowing systems in place, the financial performance of those firms was higher over the ten year period than those without systems in place.

What drives internal crime against businesses?

Zurich Insurance, studying police released crime figures, identified a 19% increase in internal theft recently. It is believed that the cost of living crisis is fueling this internal fraud/theft. It is these costs that are causing employees to steal and commit fraud from their employers.

Situational crime prevention theory helps businesses reduce losses. The UK’s Police College point to this theory as one in which businesses should become proficient. It posits that by raising the risk of getting caught and lowering the likely reward from such crime, it reduces the amount of crime committed against the firm.

Whistleblowing system deterrent - intelligence & risk solutions

One method to reduce internal theft is to put in place deterrents. Having an operational whistleblowing system that places in the hands of every employee a method for them to report anonymously, will deter others from committing crime. This ‘fear of getting caught’ reduces the volume of crime being committed within the business.

What is critical in this endeavour, is ensuring the whistleblowing system is properly ‘advertised’ across the business so it is impossible for employees to not know the system exists.

It is also critical to ensure all employees can report anonymously and that the system is not stored within the businesses IT network. This encourages whistleblowers to come forward and report when they know crimes are being committed against the company.

In a recent study 42% of employees who knew of workplace misconduct didn’t report it. Yet this dropped to 30% if the company had an anonymous whistleblowing platform for them to report via. Anonymity is crucial to companies who want to improve their ESG principles, the reputation of their company and the engagement of their workforce.

It is known that employees who don’t feel supported when reporting something, are more likely to leave and less likely to recommend the business to their network.

Why a whistleblowing system improves financial performance

With the reduction in the volume and cost of regulatory fines, the reduction in the volume of lawsuits and the early settlement of them and the reduction in internal crime costs, it isn’t hard to see how businesses can save money when implementing effective and efficient whistleblowing systems.

Talk to us today and we will help you implement a whistleblowing system that cuts your costs.