A much wider awareness and understanding of the range, threat and cost of fraud in business has driven reported economic crime to its highest level recorded in PwC’s bi-annual survey of business crime.
The Global Economic Crime and Fraud Survey examines over 7200 respondents from 123 countries.
Overall, 49% of respondents, said their companies had suffered fraud in the last two years, up from 36% in 2016. Asset misappropriation (45%) continues to lead in economic crime experienced by organisations in the last 24 months, cybercrime (31%), consumer fraud (29%) and business misconduct (28%) are close behind.
This year’s survey revealed a significant increase (+6%)in the share of economic crime committed by internal actors. There was also a jump in the percentage of those crimes attributed to senior management (from 16% in 2016 to 24% in 2018).
Amongst the key findings:
18 countries reported cybercrime to be more disruptive than the global average (15%), including Ireland (39%), Belgium (38%), South Korea (31%), Canada (29%), the UK (25%), and the US (22%).
Employee morale, business relations, damage to reputation and brand strength are the top three impacts reported.
Reports of disruption from consumer credit card and financial fraud were higher than the global average (29%) amongst regions including Africa (36%); Eastern Europe (36%); and North America (32%).
Cybercrime is likely to be the most disruptive economic crime in the next two years, with respondents saying it is twice as likely as any other fraud to be identified to potentially impact organisations.
It’s also worth noting that 68% of external perpetrators (responsible for 40% of fraud) are “frenemies” of the organisation – people the organisation works with, including agents, shared service providers, vendors and customers.
As awareness, and the profile of fraud and economic crime has risen, so too have investments to combat it, linked also to the direct financial losses reported in the past two years. In the coming two years, 51% will maintain investment levels, and 44% will increase them.
With the public’s tolerance for corporate and personal misbehaviour declining, in addition to beefing up their internal controls, many respondents reported addressing fraud prevention through corporate culture initiatives (via internal or external tip offs or hotlines) through which 27% of frauds were detected.
Respondents also reporting using technologies like artificial intelligence (AI) and advanced analytics as part of their efforts to combat and monitor fraud.
Despite higher levels of understanding and reporting of fraud, blind spots still prevail. 46% of respondents globally said their organisation have still not conducted any kind of risk assessment for fraud or economic crime. Additionally, the percentage of respondents who indicated they have a formal business ethics and compliance programme has dropped from 82% to 77%.
Director - Marketing & Communications, PwC Cyprus