Three quarters of companies have experienced incidents of fraud within the past year, according to new research from risk consulting firm Kroll, of which, 81 per cent have been conducted by insiders such as junior employees, senior or middle management, intermediaries and agents.
“Cybercrime is one of those things where the insider is the dominant threat. You have all these clever defences against people on the outside, but people on the inside are already on the inside,” Tommy Helsby, chairman at Kroll, told the Financial Times.
The 2015 Kroll Global Fraud Report found that the professional services sector is one of only two surveyed where senior and middle management have been found to be more likely to commit fraud than junior employees and also found that 22 per cent of professional service companies have experienced corruption and bribery – the most common type of fraud experienced in the sector. The second most common type of fraud was revealed to be internal financial fraud (14 per cent), followed closely by information theft (13 per cent) and regulatory or compliance breaches (12 per cent).
High staff turnover was cited as one of the major drivers of increased fraud exposure. “With employees constituting such a high risk, it is not surprising that executives responding to the survey believe that high staff turnover is the main driver of increased exposure to fraud, with one in three (33%) citing it as being a problem,” the report states.
The research, which was commissioned to the Economist Intelligence Unit by Kroll, surveyed over 700 senior executives within a wide range of sectors, including Financial Services, Professional Services, Retail and Wholesale, Technology, Media and Telecommunications from around the world, to identify fraud and its effects on business.
Four out of five respondents said that their exposure to fraud has increased in the sector over the past year and the data from the report suggests that professional services firms have above average levels of management conflicts of interest (13 per cent) and more than half of firms surveyed rated themselves as highly vulnerable to fraud.
“One of the most telling results from this year’s report is how vulnerable to fraud companies are feeling. In one form or another, the spectre of fraud arises in virtually every business relationship. What our report drives home is that fraud is often an 'inside job' and that companies must address both internal and external relationships if they are to most effectively protect their money, property and private data,” said Daniel Karson, Chairman, Kroll.