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● 46% of organizations worldwide report having experienced fraud or financial crime in the past 24 months; 70% of these organizations experienced new fraud incidents as a result of COVID-19
April 29, 2022 – Nassau, Bahamas – Cybercrime tops the list of threats businesses face today, while emerging risks such as ESG reporting fraud and platform fraud could impact businesses in the future.
The technology, media and telecommunications sectors have the highest incidence of fraud of all industries, according to PwC’s 2022 Global Economic Crime and Fraud Survey, which shows that the threat from external fraudsters is growing as attacks increase and become more sophisticated, and organisations’ perimeters become vulnerable.
The survey of 1,296 business leaders from 53 countries found that cybercrime, customer fraud and asset misappropriation were the most common crimes perpetrated by businesses, regardless of revenue.
Cybercrime tops threat list
The impact of hackers has increased significantly over the past two years, with cybercrime posing the greatest threat to small and medium-sized businesses. The rise of digital platforms has opened the door to a variety of financial crime risks, with 40% of those who have experienced fraud having experienced some form of platform fraud. In this year’s survey results, cybercrime far outpaced the most common crime in 2020 – customer fraud. 42% of large businesses reported experiencing cybercrime during this period, while only 34% experienced customer fraud.
Bruce Scott, PwC Caribbean Network Leader, said: “Businesses are seeing an increasing number of threats coming from outside their organisations, with criminals growing rapidly in strength and efficiency. Defending against these external threats requires new thinking. Organisations need to be more agile than ever before in responding to these converging threats and adopt new approaches and technologies to predict and prevent fraud.”
“Entities can protect themselves against cyber threats if they have a basic understanding of cyber crime and the reasonable controls they should implement,” said Nestle Maullon, senior manager, cyber at PwC Bahamas.
“In the PwC Caribbean Corporate Governance Survey we launched last month, 56% of Bahamian board members acknowledged that more attention needs to be paid to cyber/digital/technology at the board level. However, the survey also revealed that 69% of board members do not have a good understanding of the cybersecurity vulnerabilities facing their organizations. Therefore, it is imperative that organizations invest in cybersecurity awareness training from top to bottom. With adequate cybersecurity knowledge, boards can work with management to identify appropriate risk assessments that are critical to identifying vulnerabilities and implementing the necessary solutions to close them.
date
April 29, 2022
Contact information
Mieko Smith, Marketing and Communications
mieko.smith@pwc.com
page
2 pages
gaps, monitor and evaluate the effectiveness of implemented controls, and address areas for improvement. Cybersecurity management is a never-ending process as cybercriminals are always looking to find new victims.
Larger companies face greater risk of fraud
While nearly half of organizations (46%) report having experienced fraud or economic crime in the past 24 months, the impact of these crimes is more severe. Among companies with global annual revenue of more than $10 billion, 52% have experienced fraud in the past 24 months. Of this group, nearly one in five companies reported that the financial impact of their most serious incident was more than $50 million. Smaller companies (less than $100 million in revenue) were less affected; 38% experienced fraud, with a quarter of these companies facing a total impact of more than $1 million.
The growing maturity of the technology, media and telecommunications industry has helped it see a significant increase in fraud activity since 2020, with nearly two-thirds of companies experiencing some form of fraud, the highest rate of any industry.
Emerging risks, including ESG reporting fraud (changing ESG disclosures so that they do not truly reflect an organization’s activities or progress) and supply chain fraud, have the potential to cause even greater damage in the coming years. For example, only 8% of organizations that experienced fraud in the past 24 months experienced environmental, social and governance (ESG) reporting fraud. However, as the importance of ESG continues to grow for stakeholders, the incentive to commit fraud in this area is likely to increase.
Similarly, one in eight organizations experienced new incidents of supply chain fraud as a result of disruptions caused by the COVID-19 pandemic, and one in five organizations identified supply chain fraud as an area of increased risk as a result of the pandemic.
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