KUALA LUMPUR, 30 November 2011 – 44% of businesses and other organisations surveyed in Malaysia were victims of economic crime in the last 12 months, according to respondents of PwC's 2011 Global Economic Crime Survey. Around the world, 34% of total respondents surveyed reported that they were victims of economic crime.
The 44% reported in the 2011 survey represents a 57% increase over the 28% reported in the 2009 survey. In Malaysia, theft or asset misappropriation (cited by 83% of respondents) was the most common type of economic crime reported, followed by bribery and corruption (34%) and accounting fraud (27%).
The number of incidences of fraud experienced by the Malaysian respondents has also increased compared to the 2009 survey – 32% (2009: 11%) of respondents said that they each experienced between 11 to 100 incidences in the past 12 months. 10% (2009: 6%) said that they each experienced between 101 to 1000 incidences of fraud within the same timeframe.
“Economic crime continues to be pervasive, affecting both large and small organisations in Malaysia and worldwide. No industry or company in any country is immune from the impact of fraud,” said Mr Lim San Peen, Senior Executive Director, PwC Advisory Services Sdn Bhd. San Peen heads PwC's forensics practice in Malaysia.
Globally, the communications and insurance sectors reported the highest incidence of fraud. Fraud against governments or state owned enterprises rose by 24% since 2009, moving it ahead of the hospitality and leisure and financial services sectors as a target for crime.
Cost of economic crime
Though the direct cost of economic crime to an organisation can be difficult to gauge, Malaysian respondents reported rising direct losses. 7% (2009: 0%) of respondents said that they lost between USD5 million to USD100 million, while 37% (2009: 11%) said that they lost between USD100,000 to USD5 million. Victims of economic crime also reported significant collateral damage due to fraud. This includes damage to employee morale, brand and reputation (both at 24%) as well as to business relationships (17%).
From the survey, suspicious transaction monitoring has emerged as the single most effective fraud detection method, noted by 20% of Malaysian respondents. This is up from 17% in 2009. Whistleblowing and tip-offs by employees and external parties combine continues to be highly effective fraud detection methods, said 37% of respondents.
Cybercrime now ranks as one of the top four economic crimes globally with 23% of respondents reporting that they were victims of cybercrime. In Malaysia, 5% of respondents reported being victims of cybercrime, while 28% reported that they are likely to experience cybercrime perpetrated against their business and organisation in the next 12 months.
“In a world where most enterprises rely on technology, businesses are increasingly opening themselves up to the risk of criminal activity. The crime can be perpetrated from virtually anywhere on the planet, as long as there is a computer, a smart phone or any other device able to access the Internet,” said San Peen.
The perception of cybercrime as a predominantly external threat is changing, and organisations are now recognising the risk of cybercrime coming from inside as well. Malaysian respondents said the Information Technology (IT) Department was the most likely source of cybercrime internally. IT was cited by 61% of respondents, followed by Operations (57%), Sales and Marketing (50%), and Finance, (34%).
While having increased awareness to the threat of cybercrime, the majority of respondents in Malaysia said they do not have a cybercrime crisis response plan in place, or are not aware of having one. Such a response plan includes the investigation, controlled emergency network shut down procedures and media communications. 29% of respondents in Malaysia said their organisation doesn’t monitor social media sites.
“Rising incidents of data loss and theft, computer viruses and hacking and other forms of electronic crime demonstrate the need for a more cyber-savvy approach to fraud prevention,” said San Peen. “There are many ways to protect your organisation against economic crime, including conducting regular fraud risk assessments and instilling a cyber risk-aware culture,” he concluded.
Other Survey Findings
Notes to Editors:
About the 6th Global Economic Crime Survey
The survey the most comprehensive study of its kind. It was carried out between June 2011 and November 2011. The survey questionnaire had three sections: a section with general profile questions; a section with comparative questions looking at what economic crime organisations had experienced; and a section on this year’s special topic, cybercrime. 3,877 people from 78 countries filled in the online survey. Participants were asked to answer the questions with respect to their organisation and the country in which they are mainly based. There were a total of 93 respondents from Malaysia. Statistics quoted are results from Malaysian respondents, unless otherwise indicated. A copy of the global report can be downloaded from http://www.pwc.com/gx/en/economic-crime-survey/index.jhtml.
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