||Last Updated: May 10, 2022 - 8:03:55 PM
● 46% of organisations around the world reported experiencing fraud or financial crime over the last 24 months; 70% of those organisations that did encounter it experienced new incidents of fraud as a result of COVID-19 disruptions
29 April 2022 – Nassau, Bahamas - Cybercrime tops the list of current threats facing businesses, while emerging risks from ESG-reporting fraud and platform fraud could impact businesses in the future.
The tech, media and telecommunications sector experienced the highest incidence of fraud across all industries according to PwC’s Global Economic Crime and Fraud Survey 2022 which shows organisations’ perimeters are vulnerable and external fraudsters are becoming a bigger threat as attacks increase and become more sophisticated.
The survey of 1,296 business leaders from across 53 countries found that cybercrime, customer fraud and asset misappropriation were the most common crimes experienced by organisations, regardless of revenue.
Cybercrime tops the list of threats
Cybercrime poses the biggest threat to small, medium, and large businesses, after the impact of hackers rose substantially over the last two years. The rise of digital platforms opens the door to myriad financial crime risks, and 40% of those encountering fraud experienced some form of platform fraud. In this year’s survey results, cybercrime came in ahead of customer fraud, the most common crime in 2020, by a substantial margin. 42% of large businesses reported experiencing cybercrime in the period, while only 34% experienced customer fraud.
Bruce Scott, cyber leader for PwC in the Caribbean, said, “Businesses are seeing an increase in threats from outside the organisation with perpetrators quickly growing in strength and effectiveness. Defence against these external threats requires new thinking. Organisations need to be more agile than ever to respond to these converging threats, and adopt new approaches and technologies to predict and prevent fraud.”
Nestle Maullon, senior manager, cyber, PwC Bahamas said, “Entities having a basic understanding of what cybercrime is and the reasonable controls they should implement, could safeguard from cyber threats.”
“In our PwC in the Caribbean’s Corporate Governance Survey, which was launched last month, 56% of Bahamian board members acknowledged that cyber/digital/technology needs more attention at the Board level. But the survey also revealed that 69% of them only somewhat understood the cybersecurity vulnerabilities their organisations were facing. Hence, organisations must invest in cybersecurity awareness training from top to bottom. With sufficient knowledge on cybersecurity, the Board can work together with management in setting the tone that proper risk assessments are essential to identifying the gaps, implementing the necessary solutions to close
29 April 2022
Mieko Smith, Marketing and Communications
the gaps, monitoring and assessing the effectiveness of the implemented controls, and addressing areas for improvements. Management of cybersecurity is a process which never ends because cybercrime perpetrators are always motivated to find new victims.
Larger companies are at greater risk for fraud
While just under half of organisations (46%) reported experiencing fraud or economic crime within the last 24 months, the impact of these crimes have been more substantial. Among companies with global annual revenues over $10 billion, 52% experienced fraud during the past 24 months. Within that group, nearly one in five reported that their most disruptive incident had a financial impact of more than $50 million. The share of smaller companies (those with less than $100 million in revenues) affected was lower; 38% experienced fraud, of which one in four faced a total impact of more than $1 million.
The growing maturity of the technology, media and telecommunications sector helped it identify a significant increase in fraud activity since 2020 with nearly two-thirds of companies experiencing some form of fraud, the highest incidence of all industries.
Emerging risks, including ESG reporting fraud (the act of altering ESG disclosures so that they do not truly reflect the activities or progress of an organisation) and supply chain fraud, have the potential to cause greater disruption in the next few years. For example, just 8% of organisations encountering fraud in the last 24 months experienced environmental, societal and governance (ESG) reporting fraud. Yet, as ESG continues to increase in importance to stakeholders, the incentive to commit fraud in this area may grow.
Similarly, one in eight organisations experienced new incidents of supply chain fraud as a result of the disruption caused by COVID-19, and one in five sees supply chain fraud as an area of increased risk as a result of the pandemic.
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