Executives in eight in ten Indian companies have reported to have been hit by fraud, a marked increase from the 69% in 2013-2014, and well above the global average of 72%, says the Kroll Global Fraud Report 2015 that was prepared in conjunction with the Economist Intelligence Unit.
Globally, three in four of the world's companies have fallen victim to a fraud incident in the past year, a rise of 14 percentage points in just three years, with the biggest fraud threat to companies coming from employees within. Of those companies where fraud occurred and the perpetrator was identified, four in five (81%) suffered at the hands of at least one insider, up from 72% in the previous survey.
India had the highest incidence of fraud in four categories - corruption and bribery (25% of companies), regulatory compliance breach (20%), IP theft (15%) and money laundering (7.5%), the survey, which polled 750 executives from around the world, found,
Reshmi Khurana, Managing Director and Head of South Asia for Kroll, said that the India findings were consistent with previous year trends: “India has one of the highest incidence of fraud (4 out of the 11 fraud types) assessed by the survey. Further, 92% of Indian respondents have confirmed that their firms have seen an increased exposure to fraud in the last year. This is consistent with our experience on-the-ground in India. Despite these rising concerns, companies in India are not investing in the appropriate anti-fraud strategies. Companies must continue to create strong and well-organized fraud detection systems to prevent, respond to, and investigate fraud when it arises. This will help improve the ease of doing business in India.”
Moreover, despite vulnerabilities to suppliers and a high proportion of fraud being perpetrated by insiders, only 55% of the companies in India have invested in vendor due diligence and only 28% invest in staff background screening. “India Inc. is highly susceptible to insider fraud and I believe companies are beginning to understand that they need to do more to mitigate this risk," Khurana added, "While it is crucial to deal with this issue in the recruitment process, to truly safeguard against insider fraud, companies need to do more than just enhance their screening processes. They need to tighten their IT security, develop a strong whistle-blower policy and better understand how insider fraud is committed in their organization. This will help curtail future occurrences of fraud”.
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