Login
Lawyers Weekly
THE GLOBAL financial crisis has led to a rise in fraud within the financial services sector, but a drop in other industries such as construction, engineering and infrastructure, according to the…
THE GLOBAL financial crisis has led to a rise in fraud within the financial services sector, but a drop in other industries such as construction, engineering and infrastructure, according to the Kroll Annual Global Fraud Report.
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
Despite the commonly held perception that economic downturns lead to spikes in fraud levels, the survey found that, overall, fraud levels have remained stable.
The overall average combined loss to fraud reported by the companies surveyed over the last three years totalled $8.8 million, only 7 per cent higher than last year's figure of $8.2 million. In addition, 85 per cent of respondents to the 2009 survey reported that their company had experienced at least one incident of fraud over the last three years, compared with 86 per cent last year. Overall, 31 per cent of respondents said they believed fraud levels had declined, 34 per cent said they had experienced no change, while only 22 per cent reported an increase.
The most common form of fraud was theft of physical assets or stock, reported by 38 per cent of respondents (compared with 37 per cent last year). This was followed by information theft, loss or attack (25 per cent in 2009 compared with 27 per cent in 2008), management conflict of interest (23 per cent in 2009 against 26 per cent in 2008) and financial mismanagement (21 per cent in 2009 compared with 22 per cent in 2008).
However, these figures mask marked ups and downs between industry sectors, with five sectors reporting increases in average fraud losses and five reporting decreases.
For example, the financial services sector saw combined losses to fraud over the last three years rise to $15.2 million - 18 per cent above the 2008 figure. In addition, the number of respondents facing at least one incident of fraud rose from 79 per cent to 87 per cent. Notably, more than half the respondents in this sector said the GFC had led to an increase of fraud cases at their companies. The professional services sector had also seen a reasonable spike in fraud levels.
Meanwhile, the construction, engineering and infrastructure industry saw combined average fraud losses drop significantly from $14.2 million to $6.4 million, putting the sector - unusually - below the survey average. Similarly, natural resources companies, while experiencing a drop in revenues, also saw fraud levels drop.
