Firms fear information loss as fraud rises

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Firms fear information loss as fraud rises

Global fraud losses rise 22 per cent as spectre of information theft rears its ugly head.

Global fraud losses rise 22 per cent as spectre of information theft rears its ugly head.

The average cost to businesses of fraud over the last three years has spiked 22 per cent this year, research has found.

Risk consultancy Kroll commissioned the Economist Intelligence Unit to carry out The Global Fraud Report, which surveyed 900 worldwide companies across 10 different industries. Over the last three years, the average company has lost $8.2m (£4.6m) to fraud, an increase of 22 per cent on last year's figure.

The number of companies suffering at least one serious instance of fraud has also risen from 80 to 85 per cent. Theft of physical assets remains the most prevalent form of fraud and the number of firms affected rose three per cent to 37 per cent.

Information theft, loss or attack was suffered by 27 per cent of companies, up five per cent on last year. Management conflict of interest affected 26 per cent of respondents, while a quarter were hit by regulatory or compliance breaches, an increase of six per cent. The only types to fraud to decline in incidence were money laundering and procurement fraud, both of which fell one per cent.

Seventy per cent feel vulnerable to information loss, while more than half are concerned about regulatory or compliance breaches, management conflict of interest, financial mismanagement, procurement fraud and physical theft.

Blake Coppotelli, senior managing director of Kroll’s Business Intelligence and Investigations division said: “The findings show that fraud is not only widespread, but also growing and we expect to see this increase further as conditions become tougher for business and the full impact of the credit crunch unfolds.

“When you look into the causes of fraud, companies that cited high staff turnover or weak internal controls suffered much higher levels of fraud – in almost every case increasing their exposure by one-and-a-half times. Companies need to look carefully at how they can address these issues to reduce their risk to fraud and improve their business operations.”
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