This year’s annual Global Fraud Survey, commissioned by Kroll and carried out by the Economist Intelligence Unit, polled more than 800 senior executives worldwide from a broad range of industries and functions in July and August 2010.
Selected findings from the survey:
88% of respondents reported that they had been hit by at least one type of fraud in the past year, a figure broadly similar in every region and consistent with those of previous years. Record-setting, headline-grabbing scams, such as the Madoff or Satyam frauds, can give a false impression of fraud’s financial impact on business. The most successful pathogens do not kill the host, but live off them. Of course, huge, company destroying losses do occur, but they are very rare. More typical are smaller losses over months or years.
In previous Global Fraud Surveys, the theft of physical assets or stock has always been the most widespread fraud by a considerable margin. This year, however, information theft, loss or attack has become, by a small margin, the most commonly reported fraud. It is not that fraudsters are switching away from other methods: the increases and decreases in other categories are of the sort that could be expected in this type of survey. Rather, information theft grew significantly. Such growth is never uniform across the economy. Information rich industries such as Financial Services, Professional Services, and Technology, Media and Telecoms itself are the most likely to be hit.
In the survey, 48% of respondents indicate that fraud has deterred them from engaging in business in at least one foreign country. Nearly two-fifths (39%) of respondents list at least one type of fraud that had dissuaded them from doing business in a foreign market, and 36% name a country or region where their experience or perception of fraud had deterred them from operating. The issue affects small and large companies alike. The breakdown of respondents by revenue for those companies which fraud had dissuaded from investing was the same as that for the survey as a whole.
The survey found that for those companies that have been affected by fraud in the last year and the culprits identified, the most common fraudsters are equally junior employees (22%) and senior ones (22%). When agents and intermediaries (11%) are added in, the proportion of fraud carried out by those who work for the company in one way or another goes well above half. These findings are remarkably consistent across geographies.