PWC have just released the findings from their Global Economic Crime and Fraud Survey 2020. It examines over 5,000 responses from 99 territories, looking at what types of frauds are occurring, who’s perpetrating them and what successful companies are doing to come out ahead. The key findings from the survey include:
- Fraud remains at record high rates - with 47% of our respondents saying they had experienced an incident of fraud in the past 24 months.
- The top 3 types of frauds are Customer Fraud, Cybercrime and Asset Misappropriation.
- Nearly half of reported incidents resulting in losses of US$100 million or more were committed by insiders. Insider fraud is more difficult to predict and monitor. It's more about managing and mitigating downside risk, whereas external frauds lend themselves to active monitoring, and when managed properly may reduce financial impact. Internal fraud is potentially far more damaging – financial loss is likely to be higher, but such crimes also result in civil or criminal actions against the company and those involved, reputational harm, management distraction and loss of business.
- Third-parties remain a risk - half of the respondents surveyed didn’t have a mature third-party risk programme. They either don't perform, or perform only informal, risk-based due diligence and ongoing monitoring of third-parties.
- Those who reported fraud saw total losses of US$42 billion on top of the damage to brand, reputation, and market share.
- The survey advises performing robust risk assessments and acknowledging that technology alone won't keep companies protected. Organisations also need to be able to mobilise quickly in response to an attack.
- Conducting an investigation when a fraud occurs is an effective way to learn from the experience and improving controls. Nearly half (45%) of all respondents who have experienced a fraud say they emerged in a better place having done so.
- It's often difficult to justify expense on fraud prevention to senior management. However the survey finds that "there is a clear link between fraud prevention investments made upfront and reduced cost when a fraud strikes".
- The report ultimately recommends action, noting that "even the 'best' anti-fraud programmes need to be continually assessed and refined" to meet new risks.
Howard Kennedy's business crime team has a wealth of experience conducting internal investigations for companies who suspect or have uncovered internal fraudulent activity. Please click here to find out more on how we can assist you and your organisation.