Australian business rates high on fraud hit list
- 11 July, 2003 07:10
On a global scale Australian enterprises are among those hardest hit by fraud attacks, according to the PricewaterhouseCoopers' 2003 Global Economic Crime Survey.
An estimated 47 per cent of businesses in Australia experienced some form of economic crime in the last two years. In the Asia-Pacific region the figure was 39 per cent.
Sectors most vulnerable in Australia to white collar crime were companies in the manufacturing and industrial products sectors. As a result 37 per cent of organisations surveyed in Australia saw cybercrime as a threat in the next five years.
In Asia-Pacific, the three most common types of economic crime were cybercrime, corruption and bribery, and product piracy. Financial services companies reported more incidence of fraud than any other industry.
PwC said one in six banks worldwide reported they had uncovered money laundering activity in the previous two years because of improved control and compliance systems, and continued efforts to raise awareness of the crime.
Most Australian companies canvassed expected fraud to increase in the next five years. For 45 per cent of respondents, their greatest fraud risk continues to be asset misappropriation.
PwC dispute analysis and investigations partner, Malcolm Shackell said: "Far from being a victimless crime, fraud [has] a lasting impact on businesses; affecting their share price and reputation.
"The risks and incidence of economic crime will not drop without substantial actions to tackle its roots."
The financial loss from economic crime was difficult to quantify, especially for cyber crime, Shackell said.
Nearly half of the companies in Australia that reported fraud were unable to recover any of their losses, the survey found. Moreover, such losses were rarely recovered and unlikely to be insured, the report showed.
Astonishingly 90 per cent of organisations in Asia-Pacific that suffered from economic crime recovered only 20 per cent or less of the amount lost, PwC said.
Also, fewer than half of the businesses surveyed globally had insured against fraud losses.
Larger enterprises, with more than 1000 employees, were most vulnerable to fraud.
Factors amplifying bigger detection rates in large companies included investment in unfamiliar overseas markets, the transfer of management control, and investment in sophisticated fraud risk management systems, according to the survey.
"A preventative anti-fraud regime should consist of an ongoing assessment of the real risks and vulnerabilities to fraud within an organisation; senior management actively communicating a company’s fraud policy; developing policies to encourage and protect whistleblowers and developing a robust fraud response plan based on worst-case scenarios,” Shackell said.
The PwC Global Economic Crime Survey 2003 was based on 3263 interviews in 50 countries with CEOs, CFOs and officers responsible for detecting or preventing economic crime.