Global Investor

Rising global fraud

Maulik Tewari | Updated on March 10, 2014

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Fraud is on the rise according to an Annual Global Fraud Survey by Kroll, a risk consulting firm, and the Economist Intelligence Unit. Seventy per cent of companies globally were affected by fraud in 2012-13, up from 61 per cent a year ago.

While there was an increase in all kinds of fraud, vendor-supplier fraud and management conflict of interest registered the biggest growth. The most widespread crime was theft – both physical assets and information – which affected 28 per cent and 22 per cent companies, respectively. Growing complexity of IT structures is believed to be responsible for the trend of information theft.

Despite this, currently only two-thirds of companies are investing in some form of IT security. Multiple factors such as entry into new and riskier markets, high staff turnover, greater outsourcing and increased collaboration have made companies more vulnerable. India is plagued by above average incidence of theft of physical assets, corruption and internal financial fraud, with 69 per cent companies affected in 2012-13.

But even as companies acknowledge the threat of corruption, they appear relatively less concerned about other frauds.

In the US, 66 per cent of the companies reported instances of fraud, with management conflict of interest and theft of physical assets and information hurting one-fifth of them.

Canada was among the countries that experienced the highest incidence of management conflict of interest and information theft globally. On the other hand, theft of intellectual property (IP) was worst in China, where it affected 15 per cent (up from 8 per cent last year) of companies, the highest for any country covered under the survey.

Published on March 09, 2014

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