Risk Management

Fraud on the Rise

/ August 17, 2017

 

A recent global fraud and risk report by Kroll, Inc. gives insight into the state of fraud and risk incidents in 2016, during which 82 percent of respondents experienced a fraud incident—up from 75 percent in 2015 and 61 percent in 2012.

Fraud concerns affect not only a company’s bottom line, but also its ability to expand overseas. Over two-thirds of executives say their companies have been deterred from operating in a particular country or region due to fraud concerns.

The Most Common Perpetrators Come From Within

Contrary to the popular belief that security breaches come from external sources, the most common perpetrators of fraud, cyber incidents and security incidents were internal.

  • Fraud—Sixty percent of respondents who experienced fraud identified a combination of current employees, former employees and third parties as perpetrators.
  • Cyber Incidents—Overall, 44 percent of respondents reported that insiders were to blame for cyber incidents, with 20 percent of the source of risk attributed to former employees.
  • Security Incidents—Insiders were the main perpetrators of security incidents at 56 percent, with former employees accounting for 23 percent of security incidents.

Increasingly Complex Threats for Businesses

The evolving nature of incidents reflects a growing challenge for businesses. While every fraud category has seen an increase in incidents between 2015 and 2016, market collusion and misappropriation of company funds realized the greatest increases, at 15 percent and 11 percent, respectively.

Mitigating Fraud

While insiders are cited as the main perpetrators of fraud, they are also the most likely to discover it, with 44 percent of respondents reporting that it had been discovered through a whistle-blowing program, and 39 percent reporting that it was detected through an internal audit. In fact, over 75 percent of respondents indicated that their companies have adopted employee-focused anti-fraud measures, technical countermeasures and physical security measures.

Fraud concerns within your organization?  Contact Exude today for fraud mitigation assistance.

 

Comments