Corporate fraud is a growing problem in Australia and insurers need to promote improvements in risk management to combat the threat, says a fraud expert.

Fraud and financial crime costs $5.88 billion a year and represents 31% of total crime costs, a far larger proportion than any other crime.

Aon Head of Fraud Risk Services Shane Boyd told insuranceNEWS.com.au the industry should be doing a lot more to prevent fraud from occurring rather than ignoring the problem.

“Obviously fraud has an impact on insurance from the insurer’s perspective in terms of premiums,” he said. “But if organisations who are the insured can reduce their fraud risk and reduce their premium it is also good for the insurer because it means that they will pay out less. Everyone stands to benefit.”

Mr Boyd says to reduce the risk of fraud, companies need to undertake regular stock takes and awareness training, conduct fraud risk assessments, encourage whistleblowers and implement a “meaningful” fraud control policy.

“It’s better to have a fence at the top of the cliff than an ambulance at the bottom,” he said.