Four in five firms hit by fraud, says survey

NEW YORK – One in 10 companies loses more than $100 million a year to fraud, according to the report released on Monday. In some sectors, such as health care and financial services, almost a quarter of firms lost at least $1 million. The survey, by risk consultants Kroll for the Economist Intelligence Unit, also says 81% of businesses think their risk exposure to fraud has increased. The survey found the average annual cost to a company with revenues of more than $5 billion was more than $20 million. These figures come after a glut of financial crime and data loss incidents this summer.

More than 800 senior executives across 10 industries were questioned and 34% of them admitted to theft of assets or stock. A fifth of those surveyed also revealed financial mismanagement, information theft, self-dealing, internal financial fraud, procurement fraud, bribery and corruption. Corruption and bribery accounted for 9% of all fraud in North America and 14% in western Europe. In eastern Europe and Latin America this rose to 29%, with 39% in Africa and the Middle East.

A third of companies said the increase in fraudulent incidents was due to high staff turnover. “The risks of fraud for business are greater today than in the past,” says Andres Antonius, president of Kroll's Consulting Services Group. Technology firms are among the worst hit – 31% of those surveyed blamed IT complexity for the fraud they experienced. Kroll highlights new technologies, investors, expansion into international markets and increased collaboration between companies as having contributed to the increased risk of exposure to fraud.