(NEW YORK/LONDON/SYDNEY): People are an organisation’s greatest asset and greatest liability according to the 2007 PricewaterhouseCoopers Global Economic Crime Survey released 24 October 2007.
PricewaterhouseCoopers partner of Investigation & Forensic Services Malcolm Shackell says, “Any organisation with people, whether public or private, is at risk of economic crime."
"Economic crime is a part of everyday business life. Close to 50 per cent of the organisations surveyed in Australia reported an incident of economic crime over the past two years, the average cost of which was around AU$1.5 million per incident."
In Australia, the typical perpetrator of economic crime is male, aged between 31 and 40, and has been in his position with the organisation for an average of 5 years.
"While there is a ‘typical’ perpetrator profile, fraud exists across all levels of an organisation. No organisation and no industry is immune to economic crime."
The PwC Global Economic Crime Survey is the largest international company survey of economic crime worldwide. Carried out every two years, it surveys more than 5400 companies in 40 countries including Australia.
Key findings
Key findings from the Australian survey include:
Emerging risks
New economic crime risks have emerged for Australian businesses driven by exposure to global markets, legislative change and the increasing sophistication of economic crime.
Survey results show that the threat of Intellectual Property (IP) infringement continues to grow. In Australia, IP theft is now the second most prevalent type of economic crime perpetrated over the past two years, second only to asset misappropriation.
The results also indicate an awareness gap around the potential risk of exposure to foreign corruption. Less than 5 per cent of Australia organisations believe there is a risk to their organisation of foreign bribery as compared to 20 per cent in Asia Pacific.
Mr Shackell says, "Half of the Australian businesses surveyed have taken no action to manage exposure to corruption in a foreign jurisdiction."
Fraud detection perception gap
The survey shows that there is a clear perception gap between how Australian organisations believe they will detect fraud and the reality of how fraud is actually detected.
People are the single most effective control of detecting economic crime either through informal tip-off or more formal hotlines.
"While systems and controls support a strong culture and awareness of risk, 2 in 5 economic crimes reported were detected by people," says Mr Shackell.
Mitigating risk
All organisations with people need to mitigate risk. The most effective way to do this is to combine culture with controls.
"It is critical that organisations set the tone from the top and establish an environment that encourages and enables people to report any suspicions to management, "says Mr Shackell.
On the control side, organisations need to concentrate on fraud risk management and identify risk, assess controls and act on any gaps.
About the survey
The 2007 PricewaterhouseCoopers Global Economic Crime survey interviewed 5,428 leading organisations globally, 894 in the Asia Pacific region and 104 in Australia.
Interviews were conducted with representatives from various functions including finance, audit, legal, human resources, security, risk, compliance and at the CEO/Board level. Industries covered included aerospace and defence, automotive, chemicals, communication, energy, utilities and mining, engineering and construction, entertainment and media, financial services, government services/public sector, healthcare, insurance, industrial manufacturing, pharmaceuticals, retail and consumer, technology and transportation and logistics.
Australian companies were chosen at random with an emphasis on the 500 largest organisations in the country. The results were compiled by independent experts and reported to PWC to protect anonymity of those surveyed.
Further information on survey demographics and definitions of global economic crime can be found in the Global Economic Crime Survey 2007 at http://www.pwc.com/crimesurvey
Audio news interview grabs are available for immediate download from www.mediagame.com.au until 25 October 2007.
Media Enquiries
Dannielle Hinwood
Communications Manager
PricewaterhouseCoopers
Ph: +61 2 8266 0636
E: dannielle.hinwood@au.pwc.com
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