Significant spike in internal fraud over past year, Kroll Global Fraud Report reveals Information theft is widespread; U.S., Indonesia and Russia report highest levels worldwide

Internal fraud increased significantly, according to the 2012/2013 Kroll Advisory Solutions’ Global Fraud Report.  This year’s study shows that over two-thirds of corporate frauds are committed by insiders, up for the second year in a row from 60 percent last year and 55 percent in 2010.

Fraud continues to hit many global companies with more than six in 10 companies reporting they were affected by fraud last year.  The findings are contained in a study commissioned by Kroll Advisory Solutions with the Economist Intelligence Unit of more than 800 senior executives worldwide.

Information theft remains one of the most widespread frauds facing companies. Its slight decline —21 percent of companies are affected this year compared with 23 percent in the last survey — shows that it is more resilient than some other frauds, which saw much greater declines.  Moreover, it remains the fraud to which respondents feel most vulnerable.  Thirty percent say they are moderately or highly so and cite IT complexity as the leading cause of increased exposure to fraud risk.  Surprisingly, it is employees, rather than hackers, who are more to blame for the loss of information.  Where there has been a loss, 35 percent of the time the issue is employee malfeasance, more than twice the rate at which external hackers are to blame (17 percent).

This year’s study sheds new light on how fraudsters interact when perpetrating frauds.  Despite a decline in the overall prevalence of fraud from 75 percent to 61 percent globally, there is a continued rise in insider fraud; a key finding is that fraudsters tend either to act alone or cooperate with peers rather than with members of outside groups such as vendors or suppliers. Those acting alone tended to be insiders – junior employees, senior managers, or agents of the company.  The study also found that when a fraud involves more than one type of perpetrator, external parties are more often involved.  More than four in ten companies (43 percent) affected by multi-perpetrator fraud reported that suppliers were involved, while 37 percent of the same group reported that vendors participated.

Source: Kroll Global Fraud Report