MUMBAI: India witnessed a significant increase in frauds 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, the Kroll Annual Fraud and Risk Report has revealed.
Fraud, cyber, and security risks are at an all-time high, according to the senior corporate executives surveyed worldwide for the 2017/18 report. The proportion of executives globally 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.
India on its part, 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 last 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).
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, Managing Director and Head of South Asia for Kroll, said in a release: “In India, the percentage of respondents affected by fraud increased significantly by 21% in 2017 to 89% while the global average this year is 84%.”
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).
Tarun Bhatia, Managing Director, Kroll South Asia, commented: “The silver lining for India is that while higher proportion of companies witnessed fraud during 2017, increasing number of companies are also becoming aware of risks related to fraud and are taking preventive measures to tackle the issue. In India, a growing proportion of participants stated that they were addressing fraud risks through a combination of measures with most common being better financial controls (50% in India, compared to 42% globally), IT security (53% in India, compared to 44% globally) and due diligence on partners, clients, and vendors (40% in India compared to 30% globally). In coming years, however, combating information security risks would gain priority as fraud risk due to information theft is only likely to increase as India chases its digitization dream.”
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%).
Source by:- economictimes
