Beware the ‘enemy within’, warns study, as insider fraud grows

The proportion of corporate frauds committed by insiders has increased for the second year running, according to new figures released as part of the Kroll Advisory Solutions Global Fraud Report. The findings revealed that 67 per cent of corporate frauds affecting European businesses are committed by insiders, up from 58 per cent last year and 54 per cent in 2010.

Nearly two thirds (63 per cent) of European businesses reported that they were affected by fraud in the past year, which is slightly higher than the global average of 61 per cent. More than half (56 per cent) said their exposure to fraud has increased in that time.

Around 10 per cent of the businesses questioned had fallen victim to corruption or bribery in the past 12 months, which Kroll warns is a heightened risk in many emerging markets.

Half of those with increased exposure to fraud (49 per cent) cited the complexity of their IT infrastructure as a reason for this, and one in four (24 per cent) claimed it was as a result of high staff turnover.

Tommy Helsby, the chairman, Kroll Advisory Solutions, Eurasia, said: “One look at the global headlines in the past year, from LIBOR-fixing in London to accounting fraud in Tokyo, will tell you that fraud continues to be a pervasive issue, and for each story that enters the public consciousness there are many more that don’t.

“Increasingly, fraud exhibits industry-specific and regional characteristics, which require detailed knowledge of a market, sector, business process or culture to unearth, redress and prevent. Companies that get complacent about it do so at their own peril.”

Emerging markets continued to report high levels of fraud.

Africa retains its position as the region with the largest fraud problem.

Outside of Africa, India has the highest number of companies affected by fraud of any region or country (68 per cent), followed by Indonesia (65 per cent).

Indonesia experienced the highest rate of information theft (35 per cent) among the countries surveyed.

Kroll commissioned The Economist Intelligence Unit to conduct a worldwide survey on fraud and its effect on business during 2012. A total of 839 senior executives took part in the survey.

The highest number of respondents came from the financial services industry (17 per cent).

Half of the companies polled had global annual revenues of more than $500m.