Economic Crime Goes Up in Recession?

In the October issue of Security Management magazine, there is yet another article, “Corporate Crime in Hard Times,” that tries to tie an increase in business crime to the economic downturn despite decreases in violence and property crime over the same period.  As is the case with most of these types of articles, they rely on whether crime is occurring during the period (e.g. “35 percent of American companies said they had been the victim of at least one significant economic crime from August 2008 through July 2009”) and perceptions of executives (e.g. “..the majority of U.S. executives (53 percent), perceived that the most likely reason for their increased risk of fraud could be attributed to increased pressure during these difficult economic conditions”).

Everytime we go into an economic downturn, I know to expect calls from newspaper reporters and TV producers wanting me to say that there will be more theft from both shoplifters and employees due to increased financial need.  Of course, I refuse because there is no way that we can know whether this occurs since we don’t have measurements to this very issue.  As for theory, there are some research studies that suggest employees are less likely to participate in workplace deviance when it is harder to replace their job such as is the case when unemployment is higher.

Still, the article does make some excellent points about the importance of employee awareness programs and internal hotlines in combating internal fraud.  Also, there are quite a few references to the PriceWaterhouseCooper’s Global Economic Crime Survey.

One Response to Economic Crime Goes Up in Recession?
  1. Murat Can
    January 7, 2011 | 8:05 PM

    I tottally agree that employees are less likely to participate in workplace deviance when it is harder to replace their job. But still, we need to look at whether recessions times are giving more opportunity to commit fraud? On the cost side, the answer is definately no. When it comes to revenue side, pressure is more than ever, so does opportunity. Such a pressure might lead a professional to feel like nothing to loose and commit to fraud. The key point is managing the pressure on employees and giving them less opportunity for fraud.