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Study shows fraud threats have increased across the board

Fraud from cyberattacks and insiders among the most prevalent

The rapid expansion and increased international presence of companies has made them more susceptible to fraud, so says the Kroll Global Fraud Report, out earlier this week. The reports polled 901 senior executives, almost half of whom work in corporations that make over $500 million a year. The results show an increased need for caution in a world where exposure to cyberattacks, and international and insider fraud threats are straining the wallets and internal relations of many companies.

In a press release, Tom Hartley, CEO of Kroll, said, “It should come as no surprise to anyone whose job it is to combat fraud that the global incidence of fraud is rising. But the measure of a good company is not whether or not you’ve suffered a fraud, it’s how you prepare for it.”

The report showed that most companies now expect a more diverse range of threats. While the kinds of threats each company faced in 2012 was only around 1.9, it increased to approximately 2.3 in 2013. 81 percent of those polled said that they had felt the risk of fraud increased in the past year, up from 63 percent the previous year.

Overall, 70 percent of companies were affected by fraud in the past 12 months, and there was an increase in every category of fraud covered by the study. Among the most prominent areas of fraud increase were threat from insiders and threat from cyberattack.

72 percent of those polled said that they had dealt directly with insider fraud; fortunately, much of that fraud was caught by internal audit. Fifty two percent of the cases caught were the result of such audits, with another 32 percent of those cases involving a tip-off from whistleblowers. This shows that while there are certainly threats from the inside, the concerted effort of employees and processes helps to stop those intrusions.

Perhaps least surprising is the increase of fraudulent activity in technology. As companies gain an increased reliance on networked devices, the efforts to circumvent their security precautions for monetary gain should be expected to rise to meet it. The study showed that 21 percent of companies are highly vulnerable to cyber threats, with 75 percent registering as moderately vulnerable. Thirty seven percent of respondents blame the increase of these attacks on the increasing complexity of their IT infrastructure.

The news that fraud is on the rise in all arenas is disconcerting, but with the proliferation of connectivity and the increased reliance on vendors and consultants to address its complexity it’s perhaps not too surprising. Kroll recommends that executives tackle these issues proactively, by remaining vigilant of new techniques that can catch the intrusions before the leach valuable time and money from a company

Executive Editor

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Chris DiMarco

Chris DiMarco, Executive Editor of InsideCounsel magazine, has a background in multimedia production with previous involvement in projects in which he developed and created content...

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