Asia-Pacific (APAC) businesses risk incurring an average cost of $3.95 for every Singapore dollar lost to fraud, according to the 2023 LexisNexis true cost of fraud study by LexisNexis Risk Solutions. Financial institutions incur a cost of $4.59 for every dollar lost while retailers lose about $3.07.
The annual study, based on a commissioned survey facilitated by Forrester Consulting, found that 58% of APAC organisations have reported an increase in fraud year-on-year (y-o-y).
These costs that companies bear not only include financial losses due to fraud, but also encompass internal labour expenses, external costs, legal costs and recovery fees, coupled with the expenses associated with replacing lost or stolen merchandise.
While the increasing digitisation of payments improves payment experience, it also increases the risk of exposure to various systems and channels to more innovative fraud attacks. According to the study, digital fraud has overtaken physical fraud for the first time, accounting for 51% of overall fraud losses.
The anonymity of digital, cross-border transactions continues to exacerbate quick and untraceable fraud. Cybercriminals have expanded their abilities to exploit both consumers and businesses through the increasing utilisation of technology, such as artificial intelligence (AI).
The study has also shed light on the evolution of criminal tactics with APAC. New account creation has accounted for the highest fraud losses within the stage of the customer journey, with 46% of financial institutions and 44% of retailers signalling this as their greatest challenge.
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The dynamic threat of fraud is not easily overcome as criminals continue to innovate their exploitation tactics alongside the increasing popularity of digital banking and commerce such as using synthetic identities to open fraudulent accounts.
"The issues facing businesses become even more challenging due to the fraud multiplier effect, where the losses experienced by organisations continue to increase and far exceed the lost face value in any transaction. Preventing fraud requires a multi-layered approach throughout the customer journey,” says Thanh Tai Vo, director of fraud and identity within APAC at LexisNexis Risk Solutions.
Moving forward, in response to increasing fraud and cybersecurity risks, the study advises APAC companies to integrate forward-thinking fraud management and authentication solutions. This includes solutions such as leveraging the capabilities of advanced technologies such as AI, and biometric and behaviour-based authentication methods.
