By Raheem Akingbolu
Eighty-two per cent of executives surveyed worldwide experienced a fraud incident in the past year compared to 75% in 2015, according to the Kroll Annual Global Fraud and Risk Report. Eighty-five per cent of executives reported at least one cyber incident and over two-thirds reported security incidents Current and former employees were the most common perpetrators
The report, which was made available to THISDAY by Kroll representatives in Nigeria, indicated that Fraud, cyber, and security incidents are now the “new normal” for companies across the world,
According to the executives surveyed for the 2016/17 Kroll Annual Global, the proportion of executives that reported their companies fell victim to fraud in the past year rose significantly to 82%, from 75% in 2015 and 70% in 2013, highlighting the escalating threat to corporate reputation and regulatory compliance.
It also stated that cyber incidents were even more commonplace; with 85% of executives surveyed saying their company has suffered a cyber incident over the past 12 months. Over two-thirds (68%) reported the occurrence of at least one security incident over the course of the year.
Despite widespread concerns about external attacks, the findings reveal that the most common perpetrators of fraud, cyber, and security incidents over the past 12 months were current and former employees.
Six out of ten respondents (60%) who worked for companies that suffered from fraud identified a combination of perpetrators that included current employees, former employees, and third parties. Almost half (49%) said incidents involved all three groups. Junior staff were cited as key perpetrators in two-fifths (39%) of fraud cases, followed by senior or middle management (30%) and freelance or temporary employees (27%). Former employees were also identified as responsible for 27% of incidents reported.
Overall, 44% of respondents reported that insiders were the primary perpetrators of a cyber incident, with former employees the most frequent source of risk (20%), compared to 14% citing freelance or temporary employees and 10% citing permanent employees.
Adding agents or intermediaries to this “insider” group as quasi-employees increases the proportion of executives indicating insiders as the primary perpetrators to a majority, 57%.
Over half of respondents (56%) said insiders were the key perpetrators of security incidents, with former employees again the most common of these (23%).
Co-Chairman, Kroll Investigations & Disputes, Tommy Helsby, was quoted to have stated that: “this year’s Kroll Global Fraud and Risk Report shows that it’s becoming an increasingly risky world, with the largest ever proportion of companies reporting fraud and similarly high levels of cyber and security breaches. The impact of such incidents is significant, with punitive effects on company revenues, business continuity, corporate reputation, customer satisfaction, and employee morale.
“With fraud, cyber, and security incidents becoming the new normal for companies all over the world, it’s clear that organizations need to have systemic processes in place to prevent, detect, and respond to these risks if they are to avoid reputational and financial damage.” He said.
The vast array of perpetrators and ever-evolving nature of incidents reflect an increasingly complex risk management environment for businesses.
It was further stated in the report that every category of fraud has seen a marked increase between 2015 and 2016. The greatest increases were in the areas of market collusion (15%) and misappropriation of company funds (11%). Theft of physical assets remained the most prevalent kind of fraud suffered in the past year (reported by 29% of respondents), followed by vendor, supplier, or procurement fraud (26%).