Report says concern about fraud is dropping faster in companies than fraud itself
Geetanjali Minhas | December 1, 2012
With 68 percent companies affected by fraud this year followed by China and Indonesia at 65 percent each, India’s vulnerability to fraud risks remains significantly above the global average of 61percent, says the ‘Global Fraud Report’ released by Kroll Advisory Solutions.
Because of the perceived fraud risks, 33% Indian companies are reported to have put off their global investments in at least one foreign market as compared to that of 27% global companies and 8% Chinese.
A striking aspect that has emerged out of the findings is that despite average revenue loss at 1.2%, which is significantly higher than the global average of 0.9%, Indian companies are less likely to invest in anti-fraud strategies, notably, information theft where despite being aware of it as being the key risk, only 40% of Indian companies plan to invest in IT security compared to 53% globally.
“Budget constraint was the main factor that led to frequent weakened internal controls in 22% Indian firms, the highest figures of any country or region,” say findings of the report. Information theft affected 21% of companies surveyed worldwide.
“Trending like last year with highest no of companies affected by fraud only behind Africa, India’s current year’s findings tell theft of physical assets or stock as main area of fraud at 27% as against corruption and bribery last year.”
While 50% of those surveyed in India consider themselves vulnerable to corruption and bribery, with a slight decline, 20% companies this year were affected by vendor, supplier or procurement fraud as against 22% last year. Globally, this figure fell from 20% in 2011 to 12% in 2012 as per the recent Global Fraud Survey.
A total of 840 senior executives worldwide including 60 in India were surveyed in the study commissioned by Kroll Advisory Solutions and Economist Intelligence Unit.
“The percentage of Indian businesses that have been affected by fraud has fallen from last year (84% in 2011 to 68% in 2012), but our experience suggests that while concern for fraud may be dropping, fraud is not,” said Reshmi Khurana, Head of Kroll Advisory Solutions in India.
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