In most countries, the services sector vastly outweighs the production of physical products. With more work being done electronically both in and out of the office, there’s a new wave of fraud affecting the workplace. Threats surrounding information and electronic data theft vary based on the nature of your company’s workplace and products or services offered. In previous posts, I’ve discussed the importance of electronic data and information security. Now, thanks to the Kroll Global Fraud Report, there are numbers to back up these issues as growing concerns.
The Numbers Speak For Themselves
The 2010/2011 edition of the Kroll Global Fraud Report was recently released and some of the findings in this year’s report are pretty shocking. For the first time ever, information and electronic data theft was reported as the most common type of fraud, overtaking physical theft. In the Reuters article “Firms Lose More to Electronic Than Physical Theft,” the author interviewed Tommy Helsby, Kroll chairman for Europe, Middle East and Africa about the findings from the survey:
“‘How much fraud there is depends more on opportunity than anything else. Much more work is done electronically, and that creates new opportunities for fraud. It takes time for companies to catch up with that.'”
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Some of the other key findings from the Kroll report include:
- Fraud was usually an inside job, as almost half of the respondents attributed fraud to their employees.
- 48% of the survey respondents stated that fraud was the main reason their companies haven’t expanded into certain emerging markets, such as China, Africa and Brazil.
- Only 1/3 of the respondents with a presence in the UK or the UK felt that the FCPA and UK Bribery Act applied to them.
Your company can’t hide from fraud- but it can reduce the opportunity for fraud to occur. In the Reuters article mentioned above, Helsby addresses the issue of investing in foreign markets:
“‘Almost half of respondents said fear of fraud had dissuaded them from pursuing business opportunities in at least one foreign country — particularly China, Africa and Latin America. ‘That means you miss out on some of the fastest growing markets,’ said Helsby. ‘You can’t make the risk go away, but you can manage it through having the right systems in place.'”
In the Kroll survey, 77% of respondents report that they feel unprepared to deal with information and data security risks. This is an alarming statistic, as companies cannot afford to fail to address these issues. Another finding from the survey that concerns me is the shockingly low number of respondents who reported that they felt the FCPA and UK Bribery Act applied to their businesses. Before companies can begin to protect themselves from these risks, they need to understand the implications that laws and regulations have on them. Violations under the FCPA have skyrocketed in the US this year and for companies to think that this law doesn’t apply to them is surprising.
Visit the Kroll website to learn more about the findings from this year’s Global Fraud Report.