USA – ILLINOIS Trends and Developments Contributed by: Kristofer Swanson, Andrew Bayer and Jordan Kraner, Hilco Global Professional Services
Fraud Risk and Strategic Response Opportunities in Illinois: A Private-Sector Perspective Illinois as a concentration point for fraud risk For companies that do business in Illinois, fraud risk is not theoretical or hypothetical – it is downright per - nicious. Anchored by Chicago’s role as a global financial, com - mercial and logistics hub, Illinois sits at the intersection of capital flows, supply chains and complex service delivery. Financial institutions, insurers, healthcare systems, manufacturers, transportation networks and multinational headquarters operate in close proximity, often through layered vendor ecosystems and high- volume transaction environments. These systems are efficient, but they are also inherently complex – and complexity is often where fraud risk concentrates. Many of these industries share characteristics that elevate exposure: • high transaction volumes across multiple systems; • reliance on third-party vendors, subcontractors and intermediaries; • distributed operations with uneven control environ - ments; and • frequent use of exceptions, adjustments, and manual overrides Within these environments, misconduct rarely pre - sents as a discrete event. It more often emerges as a pattern embedded within legitimate activity – incremental overbilling, fictitious vendors, diversion of inventory, reimbursement manipulation, payroll schemes, or cyber-enabled misdirection of funds. Empirical data reinforces the scale and relevance of enterprise-facing fraud risk. According to the Association of Certified Fraud Exam - iners, organisations lose an estimated 5% of annual revenue to occupational fraud, with significantly high - er losses in complex schemes involving management or collusion. Critically, the ACFE consistently finds that fraud schemes last a median of 12 months before detection, underscoring how long misconduct can remain embedded within normal operations.
From a cyber-enabled fraud perspective, the Federal Bureau of Investigation’s Internet Crime Complaint Center (IC3) reports that business email compromise (BEC) and related schemes targeting companies con - tinue to generate billions of dollars in annual losses, with these attacks often exploiting routine payment processes and trusted vendor relationships rather than technical vulnerabilities alone. Other Illinois-specific exposure has also been sub - stantial. A performance audit by the Illinois Auditor General found that unemployment insurance overpay - ments between 2020 and 2022 totaled approximately USD5.24 billion, including fraud, identity theft and other improper payments – illustrating both the scale of potential loss and the challenges of detecting fraud within high-volume payment systems. Taken together, these data points highlight a consist - ent theme: fraud affecting companies is not only wide - spread, but often prolonged, operationally embedded, and financially material, with corresponding implica - tions to historical financial reporting and the availabil - ity of voluntary self-disclosure programmes. For corporate leadership, the implication is direct: fraud must be treated not as a remote legal contin - gency, but as an operational risk requiring prepared - ness, speed and disciplined response capability: in other words, investigative readiness. The modern fraud environment: speed, fragmentation and asymmetry The environment in which fraud occurs has evolved in ways that materially affect how companies experi - Funds now move across banks, fintech platforms, payment applications and, increasingly, digital asset ecosystems with minimal friction. Transactions that once required days can occur in seconds. Fraud schemes exploit this speed, often layering transfers across multiple intermediaries to obscure origin, con - trol and ownership. The consequence is practical: time directly affects recoverability. By the time a transaction is flagged, ence – and respond to – risk. Real-time movement of value
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