Companies around the world increasingly falling victim to fraud, survey finds
While fraud continues to rise around the world, it is China that is being hardest hit.
According to research from Kroll, the proportion of companies that fell victim to fraud in the past year rose significantly to 82%, from 75% in 2015 and 70% in 2013.
This escalating threat to corporate reputation and regulatory compliance is particularly prevalent in China, where 86% of companies surveyed reported fraud last year - a 13% jump from the 2015 results.
Colum Bancroft, managing director and co-head of Kroll’s Greater China Investigations and Disputes practice says one-quarter of survey respondents indicated that they were dissuaded from operating in China due to concerns over fraud and corruption.
“Apart from junior employees, fraud in China was often committed by senior or middle management, resulting in potentially more significant losses,” he said.
“It also often involved cross-departmental and multiple-party-collusion, rendering many traditional internal control measures ineffective.”
Respondents in China named regulatory or compliance breaches as the most common type of fraud, at 41%, nearly double the global average. This was followed by vendor, supplier, or procurement fraud.
Other significant types of fraud reported in China included theft of physical assets or stock as well as theft of data and information.
Perhaps unsurprisingly, Chinese companies surveyed also fell victim to above-average rates of corruption and bribery, market collusion, and the misappropriation of company funds.
Cyber incidents were also prevalent in China, with 86% of respondents having experienced a “cyber incident” in the past 12 months.
FireEye Asia Pacific chief technology officer Bryce Boland told StrategicRISK: “China has a significant criminal underground, yet its cyber security maturity is relatively low, and this can leave Chinese organisations open to fraud.
“I expect Chinese organisation with get better in the coming years as awareness and defenses improve.”