Four out of five companies have suffered from corporate fraud in the past three years, according to a survey from Kroll, the world's leading risk consulting company. This news comes as the result of Kroll's Global Fraud Report. New technologies, new investors and expansion into new overseas markets have opened the door to different forms of fraud, the report concludes. In some sectors, more than a fifth of companies have lost more than $1m.
"As our society has become more reliant on information technology, increased globalization and greater interconnectedness, certain exposures have expanded right along with them," according to Jules Kroll, founder of the company. "Dramatically new exposures such as ID theft, various IT crimes, and false reporting by asset managers were rarely seen 25 years ago."
"The risks of fraud for business are greater today than in the past," said Andres Antonius, President of Kroll's Consulting Services Group. "Even the whiff of a fraud may sometimes be sufficient to place a company under severe scrutiny or in financial distress."
The report draws on a survey by the Economist Intelligence Unit of 900 senior executives worldwide. It reveals:
-- Theft of physical assets or stock, which was experienced by 34% of surveyed respondents, is particularly widespread. In addition, a fifth of companies suffered from information theft, self-dealing, financial mismanagement, internal financial fraud, procurement fraud, or corruption and bribery.
-- The average cost due to fraud to large companies -with annual revenues of more than $5bn - was more than $20m, with about 1 in 10 losing more than $100m. More than a fifth of all companies in some sectors had lost more than $1m - healthcare, pharmaceuticals and biotechnology; construction, engineering and infrastructure; and financial services.
-- Theft, loss of or attack on information are the biggest concerns to companies when asked how they assess their future risk, with 20% of respondents describing themselves as highly vulnerable. More than 30% believe that IT complexity has increased their exposure to fraud.
-- High staff turnover is the most frequent cause of increased exposure to fraud, which is cited by 32% of respondents. Close behind are complex IT arrangements (31%), entry into new markets (28%) and increased collaboration between unrelated companies (26%) - all of which are factors that are closely tied with modern business practice. Entry into new markets is of particular concern for larger organizations (38%).
-- The extent of corruption and bribery varies widely from one region to another. The proportion of companies that has recently suffered from it in the Middle East and Africa (39%) is by some distance the highest. But more than twice as many Eastern European respondents (29%) have experienced the problem than those from Western Europe, (14%), and more than three times as many from Latin America (29%) as from North America (9%).
To get a copy of the Kroll Global Fraud Report, please visit www.kroll.com/fraud.
About Kroll
Kroll, the world's leading risk consulting company, provides a broad range of investigative, intelligence, financial, security and technology services to help clients reduce risks, solve problems and capitalize on opportunities. Headquartered in New York with offices in more than 65 cities in over 33 countries, Kroll has a multidisciplinary team of more than 4,200 employees and serves a global clientele of law firms, financial institutions, corporations, non-profit institutions, government agencies, and individuals. Kroll is a subsidiary of Marsh & McLennan Companies, Inc., the global professional services firm.