Business Report All-Time High Levels Of Fraud, Cyber and Security Incidents During 2017

Fraud, cyber, and security risks are at an all-time high, according to senior corporate executives surveyed worldwide for the 2017/18 Kroll Annual Global Fraud & Risk Report. The proportion of executives reporting that their companies fell victim to at least one instance of fraud over the past 12 months increased to 84%, from 82% in the previous survey. Levels of reported fraud have steadily risen every year since 2012, when the reported occurrence was just 61%.

An even greater percentage of executives surveyed (86%) said their companies had experienced a cyber-incident or information theft, loss, or attack over the past 12 months, slightly up from 85% in 2016.  Seven in 10 respondents (70%) reported the occurrence of at least one security incident during the past year, compared to 68% in the previous survey.  North America and Europe were the most affected with 92% of respondents affected by fraud, up from 83% in 2016.

India witnessed a significant increase with 89% of executives reporting that their companies were victim to at least one instance of fraud over the past 12 months, up from 68% in 2016. India also witnessed the highest incidence of fraud globally across three categories - Theft of physical asset or stock (40%), IP theft, piracy or counterfeiting (36%) and Corruption and bribery (31%).

Further in five of the eleven categories, India witnessed an increase in percentage of respondents affected by fraud indicating that risk of fraud is both widespread and in different forms.

The report revealed that most common perpetrators of fraud incidents in India over the past 12 months were joint venture partners with 45% respondents naming them as the primary perpetrators.

This is a shift from past year’s finding when current and former employees were the main perpetrators of fraud within a company. This year, junior employees were the second most common perpetrators causing fraud incidents (43% respondents).

In same vein, 40% of Indian respondents felt that increased collaboration between firms (joint-ventures, partnerships etc.) was the main reason behind increased exposure to fraud. However a high proportion of respondents (38%) also attributed increasing exposure to public digital touch points (e.g., employee’s social media use, personal computer use, etc.) as the reason. Globally, high staff turnover and increased outsourcing and offshoring were the main reasons behind increased exposure to fraud.

Reshmi Khurana says both new and experienced investors can minimize fraud, cyber and security risks by:

• Starting with a deep and qualitative assessment of the operating environment and potential partners
• Understanding the full dynamics of the business, cyber and geopolitical environment of the country in which they are investing
• Not getting swayed by the competitive pressures of the investment environment
• Not compromising on the independence and integrity of the due diligence process

As much as 33% of respondents in India suggested that the extent of loss suffered by their company due to fraud was more than 7% of the revenues. This is significantly higher than 23% of respondents witnessed globally. Mexico was the only country where a larger proportion of respondents suffered loss of over 7% of revenues due to fraud (39% respondents).

Cyber security remains an area of concern with 84% of Indian respondents saying they have experienced a cyber-attack in the past 12 months, indicating an 11% point increase from 2016 (73%). The Kroll Report reveals that respondents are experiencing a heightened sense of vulnerability to fraud, cyber, and security risks, with information-related risks now being the area of greatest concern.

49% of respondents in India felt they were most vulnerable to information theft, loss or attack (e.g., data theft). This is similar to the global view with highest proportion of respondents feeling most vulnerable to information theft, loss or attack (24%).