PwC's 2011 Global Economic Crime Survey Finds Economic Crime Continues to Increase
PwC's 2011 Global Economic Crime Survey Finds Economic Crime Continues to
-- 34 percent of respondents were victim to one or more frauds in last 12
-- Cybercrime on the rise as technology use expands
LONDON and NEW YORK, Nov. 29, 2011 (GLOBE NEWSWIRE) --More than a third of
businesses and other organisations around the world were victims of economic
crime in the last 12 months, according to respondents to PwC's 2011 Global
Economic Crime Survey released today. And nearly a quarter of victims said they
were subject to cybercrime -- the use of technology as the main element in the
Overall, 34 percent of respondents said their organisations were victims of
economic crime, a 13 percent increase since 2009. Theft or asset
misappropriation (cited by 72 percent) was the most common type of economic
crime reported, followed by accounting fraud and bribery and corruption (24
percent each) and cybercrime (23 percent). Overall, 11 percent of respondents,
nearly half of them C-suite executives, said they did not know if their
organisation had suffered a fraud.
Though the direct cost of economic crime to an organisation can be difficult to
gauge, nearly 10 percent of victims reported losses of more than US$5 million.
Among those who were victims of bribery and corruption, 20 percent said that
they lost more than US$5 million on average. Victims of economic crime also
reported significant collateral damage due to fraud. This includes damage to
employee morale, cited by 28 percent, as well as to brand and reputation, and
to business relationships, both 19 percent. Suspicious transaction monitoring
has emerged as the most effective fraud detection method, noted by 15 percent
of respondents, up from 5 percent in 2009.
The survey of 3,877 respondents from 78 countries is the most comprehensive
study of its kind. It found that economic crime remains pervasive among
organisations of all sizes, in all countries and all industries. The
communications and insurance sectors reported the highest incidence of fraud.
Fraud against governments or state owned enterprises rose by 24 percent since
2009, moving it ahead of the hospitality and leisure and financial services
sectors as a target for crime.
"Economic crime continues to be pervasive, affecting both large and small
organisations worldwide without discrimination. No industry or company in any
country is immune from the impact of fraud," said Tony Parton, partner in PwC's
forensics practice in London.
"In a world where most enterprises rely on technology, they increasingly open
themselves to the risk of criminal activity from virtually anywhere on the
planet where there is a computer, a smart phone or any other device able to
access the Internet," Mr. Parton said "Rising incidents of data loss and theft,
computer viruses and hacking and other forms of electronic crime demonstrate
the need for a more cyber-savvy approach to fraud prevention."
Cybercrime now ranks as one of the top four economic crimes. The perception of
cybercrime as a predominantly external threat is changing, and organisations
are now recognising the risk of cybercrime coming from inside as well.
Respondents said the Information Technology Department was the most likely
source of cybercrime internally. IT was cited by 53 percent of respondents,
followed by Operations, 39 percent, Sales and Marketing, 34 percent, and
Finance, 33 percent.
While half of all respondents noted an increased awareness to the threat of
cybercrime, the majority of respondents said they do not have a cybercrime
crisis response plan in place, or are not aware of having one. And 60 percent
said their organization doesn't monitor social media sites.
The survey found that the typical profile of an internal cybercrime fraudster
was a junior employee or middle manager (cited by 85 percent), under the age of
40 (65 percent), and employed by the organisation for less than five years (50
Those who said cybercrime was more likely to originate from sources outside
their home country listed Hong Kong and China, India, Nigeria, Russia and the
U.S. as the countries perceived as the top cybercrime threats.
Other Survey Findings
-- Economic crime is most prevalent at large organisations. Fifty-four percent
of respondents from organisations with more than 1,000 employees reported
incidents in the last 12 months, compared with 29 percent among those with
less than 1,000, and 17 percent among those with less than 200.
-- Fraud strikes all types of organisations. Forty-five percent of victims
were government or state owned, 40 percent were listed on a stock exchange,
and 12 percent were in the private sector.
-- Accounting fraud has declined steeply since 2009. The percentage of
respondents reporting this type of fraud declined by 37 percent from 2009
and returned to 2005 levels.
-- Most economic crime of all types -- 56 percent -- is committed by internal
fraudsters. 40 percent of respondents reported fraud by an outsider.
-- The effectiveness of economic crime detection has been declining since
2007. Internal audit, risk management systems, and whistle-blowing systems
all declined as means of discovering fraud. The only detection method to
show increased effectiveness was suspicious transaction monitoring.
-- Those that seek out economic crime find it. Organisations that have
performed fraud risk assessments have detected and reported more frauds.
Notes to Editors:
Methodology: The sixth Global Economic Crime Survey was carried out between
June 2011 and November 2011. The survey questionnaire had three sections: a
section with general profile questions; a section with comparative questions
looking at what economic crime organisations had experienced; and a section on
this year's special topic, cybercrime. 3,877 people from 78 countries filled in
the online survey. Participants were asked to answer the questions with respect
to their organisation and the country in which they are mainly based.
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