Indian CXOs Fear Cyber Frauds To Shoot Up In 2017: Deloitte
Corporate India believes instances of cyber security frauds will rise in the next one year, according to a study by Deloitte. ‘Diminishing ethical values’ was identified as the most common cause for fraud by respondents across categories.
The report highlights that large organizations -multinationals and domestic companies (70 percent); small and medium enterprises (54 percent), and working professionals (65 percent) indicate corporate fraud would rise in the future.Respondents continue to identify known frauds such as bribery and corruption, diversion/theft of funds and vendor favoritism (only large organizations) and conflict of interest (only small and medium enterprises) as top fraud schemes that their organizations had experienced in the last two years.
While concerns around fraud appear similar, the methods employed to mitigate fraud reveal vast differences in approach within organizations, signaling that fraud is complex and organizations have a long way to go in effectively mitigating fraud.
In the area of fraud prevention, large organizations appeared to be focused on preventing only historically known frauds, and appeared inadequately prepared to tackle new frauds such as social media and anti-competitive behavior. For instance, on social media, the majority of respondents did not share an opinion on how their organizations would handle smear campaigns, which is a potential reputational risk.
“It is disconcerting to note that large organizations do not appear to be stepping up to face the challenge of mitigating new fraud and noncompliance risks. While we observe increased adoption of automation and continuous monitoring as part of fraud risk management, it appears that these initiatives may be unable to detect new and emerging frauds. New frauds call for new preventive measures,” said Rohit Mahajan, APAC Leader, Partner and Head, Forensic – Financial Advisory, Deloitte India.
When it comes to small and medium organizations, about (48 percent) of respondents felt there wasn’t enough commitment to tackle cyber fraud. In line with that (42 percent) felt there was inadequate budget and resource allocation to prevent fraud. About (32 percent) felt complying with anti-fraud regulations placed additional burden on them. The top three measures undertaken to prevent fraud included: Independent Audits (71 percent), implementing a code of conduct (62 percent), and regular monitoring and assessment of fraud risks (52 percent). Fraud was most likely to be detected by accident.
“Small and medium organizations are struggling to mitigate even well-known frauds such as bribery and corruption. Given the inherent limitations of these organizations, there is need for government intervention to help tackle fraud. In this regard, increased digitization in all spheres of business combined with strong enforcement of anti-fraud laws may benefit small organizations,” said Rohit.
A majority of working professionals believed that the primary responsibility to fight fraud remained with them (56 percent). They also remained optimistic about the effectiveness of laws in curbing fraud (47 percent). The report states that about (70 percent) of respondents felt that their employers provided enough opportunities for them to share instances of unethical behavior. To better tackle corporate fraud, working professionals favored ways such as openly discussing fraud and educating employees (61 percent); recognizing and rewarding ethical behavior (59 percent); and naming and shaming wrong doers (57 percent).
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