- According to a bi-annual survey of business crime put together by PwC, fraud and economic crime rates remain at record highs
According to a bi-annual survey of business crime put together by PwC, fraud and economic crime rates remain at record highs. Fraud committed by customers has topped the list of all crimes experienced at 35% last year, up from 29% in 2018. And businesses reported that customer fraud and cybercrime are the most disruptive of all the crimes.
Even though fraud committed by customers is on the rise, it is also one of the types where dedicated resources, robust processes, and technology have proven most effective for prevention. And globally, all regions experienced customer fraud in the last two years with the Middle East (47% up from 36%) and North America (41% up from 32%) seeing the biggest increases.
The Global Economic Crime and Fraud Survey examines over 5,000 responses from 99 countries. And it reports on the overall insights from companies who have experienced on average six incidents over the last two years. This report provides insights into the threat, cost of fraud and what companies need to do to develop stronger proactive responses.
“Fraud and economic crime is a never-ending battle. Getting to the root of the problem is key to preventing and dealing with future fraud. Whether it’s through technology, new processes, skills and training, or a combination – the result is strengthening business as a whole against crime, which is ultimately good for the consumer too.” said PwC Global Forensics Leader Kristin (Wheaton) Rivera.
The report also highlights the importance of prevention and how investing in the right skillset and technology can create an advantage. And nearly half of organizations responded to crime by implementing and enhancing controls with 60% saying their organizations were better for it.
But nearly half of the respondents did not conduct an investigation at all. And barely one-third reported the crime to their board, but of the organizations who did, 53% ended up in a better place.
Fraud is now hitting companies from all angles and the perpetrator could be internal, external, or there is collusion. And in the last two years, 39% of respondents said external perpetrators were the main source of their economic crime incidents. Plus 1 in 5 respondents cited vendors/suppliers as the source of their most disruptive external fraud. About 13% of respondents who experienced fraud in the last two years reported losing over $50 million.
The top 5 costliest frauds in terms of direct losses are antitrust, insider trading, tax fraud, money laundering, and bribery and corruption. And while technology is just part of the answer in fighting fraud, the report finds that more than 60% of organizations are beginning to employ advanced technologies like AI and machine learning to combat fraud, corruption or other economic crime. But concerns about deploying technology are linked to cost, insufficient expertise, and limited resources. About 28% of the respondents said it is because they struggle to see its value.
“Collecting the right data is just the first step. How the data is analysed is where companies will have an advantage when fighting fraud. Companies often fail to see the value in technology when they don’t invest in the right skills and expertise to manage it” added Rivera.
