Fraud's pervasiveness
- Over 43 percent of the companies interviewed reported suffering one or more significant economic crimes.
- The average loss from fraud per company increased nearly 40 percent in two years from roughly US$1.7 million in 2005 to approximately US$2.4 million in 2007.
- Over 80 percent of our respondents who suffered fraud also stated that this had caused damage — or significant damage — to their business.
- No industry is immune from the threat posed by economic crime although different sectors are impacted by different types of fraud.
Management's impact
- The level of collateral damage is directly proportional to the seniority of the perpetrator. In 29 percent of the occasions where senior managers were involved, the collateral damage to the brand was very significant.
Controls and culture
- Internal controls are not enough. An ethical corporate culture plays an equally important role in deterring fraud.
- Companies with both ethical guidelines and compliance programmes report suffering fewer economic crimes.
Emerging markets
- Over 43 percent of the companies interviewed reported suffering one or more significant economic crimes in the past two years.
- Companies in which parent and subsidiaries employed different accounting systems where more susceptible to fraud (61 percent of cases) that those operating a unilateral system (52 percent).
- E7 'experts' perceive significant risk associated with levels of corruption, staff integrity and legal environment in the emerging markets.
- Actual levels of reported fraud in the E7 countries are consistently high in the area of asset misappropriation.
- 44 percent of IP infringement cases (worldwide) that involved a perpetrator overseas involved a perpetrator from China.
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