46% of organisations reported experiencing fraud or financial crime over the last 24 months, cybercrime, customer fraud and asset misappropriation being the most common crimes experienced, according to PwC’s biannual „Global Economic Crime and Fraud Survey” (GECS) 2022.
Nearly two-thirds of tech, media and telecommunications businesses experienced some form of fraud, the highest incidence of any industry.
”Overall, fraud and economic crime rates show no increase since 2020 (47%), despite supply chain issues, environmental and geopolitical instability, an uncertain economy and many emerging risks. The pandemic decreased asset misappropriation, perhaps, in part, because more employees are now working remotely, with limited access to company assets, but we assisted at an increase of external fraud. Cybercrime tops the list of current threats facing businesses, while emerging risks from ESG-reporting fraud and digital platform fraud could impact businesses in the future. The rules of the game are changing and 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”, said Ana Sebov, Forensic Leader of PwC Romania.
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.
Larger companies are at greater risk for fraud
Among companies with global annual revenues over USD 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 USD 50 million. The share of smaller companies (those with less than USD 100 million in revenues) affected was lower; 38% experienced fraud, of which one in four faced a total impact of more than USD 1 million.
Emerging risks: ESG reporting, supply chain and digital platforms fraud
The rise of digital platforms, such as social media, services (rideshare, lodging) and e-commerce, opens the door to fraud and economic crime risks.
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 6% of organisations said they experienced anti-embargo fraud (participation in unsanctioned foreign boycotts) in the last 24 months. But that may change in the next 24 months as global sanctions rise to the highest levels in recent history.
Similarly, just 8% of those 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.
Also, 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.
The survey finds that threats from external entities are increasing, with perpetrators quickly growing in strength and effectiveness. Nearly 70% of organisations experiencing fraud reported that the most disruptive incident came via an external attack or collusion between external and internal sources.
The report includes 1,296 respondents from 53 countries and can be found here.