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, according to a report by PwC.
Based on a survey of 1,296 business leaders from across 53 countries, the consulting firm found that cybercrime, customer fraud and asset misappropriation were the most common crimes experienced by organisations, regardless of revenue.
Almost half of organisations, 46%, reported experiencing fraud or financial crime over the last 24 months. And 70% of those organisations that were subject to it experienced new incidents of fraud as a result of COVID-19 disruptions.
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.
Bruce Scott, cyber leader for PwC in the Caribbean, said in a press release that 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,” Scott said.
According to the report, cybercrime poses the biggest threat to small, medium and large businesses, after the impact of hackers has increased 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, PwC said.
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 over the period, while only 34% experienced customer fraud.
Isabel Gumeyi, director, technology risk assurance and advisory at PwC Cayman Islands, spoke at a cyber-readiness seminar hosted by the Cayman Islands chapter of ACCA Caribbean last week.
She emphasised the importance of being proactive in the face of cyber threat. Gumeyi recommended two or three independent verification processes, for example when making payments or changing client/vendor contact and banking information.
System access should be restricted based on zero trust and only provided as needed.
Businesses and staff must take personal responsibility for their security both at work and at home.
Gumeyi said, “Cybercrime tops the list of current threats facing businesses according to PwC’s Global Economic Crime and Fraud Survey 2022. Of particular concern is the rising threat from external perpetrators. These key topics are crucial to being cyber-ready.”
Larger companies are at greater risk for fraud
The impact of fraud and economic crimes has become more substantial. Among companies with global annual revenues of more than US$10 billion, 52% experienced fraud over 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. About 38% experienced fraud, of which one in four faced a total impact of more than $1 million.
PwC said 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 environmental, social and governance reporting fraud and supply chain fraud, have the potential to cause greater disruption in the next few years, the consulting firm said. Just 8% of organisations encountering fraud in the last 24 months experienced ESG reporting fraud. But 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 saw supply chain fraud as an area of increased risk as a result of the pandemic.
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