Insider fraud rising in India but staff scrutiny is minimal

Companies need to step up investment in anti fraud strategies, says Kroll report

geetanjali

Geetanjali Minhas | November 26, 2015



There has been 14 percent rise in fraud in companies globally, and three quarters of companies (75%) have been a victim of fraud incident in the past year.

According to the 2015 Kroll global fraud report the biggest threat to companies comes from within. In the case of four in five companies fraud had been committed at the hands of at least one insider  (81% as against 72% in last survey)  and the perpetrator was indentified. As a result of fraud , 69% of businesses suffered a financial loss  as against 64% in the previous survey. Cyber crime (51%)  and vendor, supplier or procurement fraud(49%) were highlighted as main threats  by respondents globally.

In India, 80% companies said that been affected by fraud. 4 out of the 11 types of  highest  fraud were – corruption  and bribery(25%), regulatory compliance breach(20% ), IP theft(15%)  and money laundering(7.5%).

India has also experienced increase in management of conflict of interest (12.5%) against global average of  12%. Indian companies felt most vulnerable to vendors, suppliers and procurement fraud (77%) the highest among all countries surveyed, yet  only 55% of the companies in India have invested in vendor due diligence.

 Compared to last year there is an increase of 11% fraud. 92% respondents said that their firms have seen an increased exposure to fraud in the last year. High staff turnover and complex IT infrastructure are biggest fraud drivers in Indian firms. Insider fraud turned out to be the highest in India and a key challenge, yet only 28% invest in staff background screening. The report advises better employee checks and stronger whistle blowing practice to counter these kinds of risk.

Reshmi Khurana, managing director of Kroll for South Asia, said, “to truly safeguard against insider fraud, companies need to do more than just enhance their screening processes. They need to tighten their security, develop a strong whistle blower policy and better understand how insider fraud is committed in their organisation.”

It also says that Indian companies have increased external audit/ investigations materially from 5% in 2013 to 13% in 2015 implying the role external agencies can play.  70% said that they currently invest in financial checks and 64.1% plan to increase investment in IT security and technical countermeasures.

“Despite these consistent and rising concerns, companies in India are not investing in the  appropriate anti- fraud strategies. Companies must continue to create strong and well organised fraud detection systems to prevent, respond to and investigate fraud when it arises. This will help improve  the ease of doing business in India” Khurana added.

The survey was conducted by Economic Intelligence Unit between January and March 2015. Senior executives  across industries like  financial services,  professional services, retail and wholesale, technology, media and telecommunications, healthcare and pharmaceuticals, travel, leisure and transportation, consumer goods, construction, engineering and infrastructure, natural resources and manufacturing were surveyed. 29% respondents were from  Europe, 25% from North America, 24% from Asia- Pacific region,10% from Latin America and 12% from the Middle East. 

Comments

 

Other News

BHEL begins execution of 4,000 MW Yadadri thermal power project

 Bharat Heavy Electricals Limited (BHEL) has commenced the execution of the 4,000 MW Yadadri supercritical thermal power project. The order of the project was placed by Telangana State Power Generation Corporation Limited (TSGENCO).    The thermal power project is locat

Jaipur airport rated as best airport in survey

 The Jaipur airport has been rated as the best airport in the category of 2-5 million passengers in ACI-ASQ (airports council international-airport service quality) survey at a function held in Mauritius. Srinagar airport was adjudged as the second best airport in the same category. This is

Teacher absenteeism common: Report

UNESCO’s latest report on education has put the spotlight on a host of issues, including teachers’ absenteeism. Global Education Monitering Report 2017 http://unesdoc.unesco.org/images/0025/002593/259338e.pdf said that In India, estimates differed among studies on absenteeism of

Would former IB director Dineshwar Sharma be able to initiate fruitful talks in J&K?

Would former IB director Dineshwar Sharma be able to initiate fruitful talks in J&K?

Would rejigging GST help small businesses?

Would rejigging GST help small businesses?

Sowing wheat earlier can help increase yields in India: US researcher

Yield gaps in wheat production in India can be countered with an earlier sowing date, says a University of Michigan researcher.   Using a new way to measure wheat yields, Meha Jain, assistant professor at the U-M School for Environment and Sustainability, found that the wheat yie



Video

Grand Diwali celebrations in Ayodhaya on eve of diwali

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter