Global Economic Crime Survey 2016 - Bulgaria Country Report

Welcome to our 2016 Global Economic Crime Survey, covering the period from our last survey in 2014 to 2016. It is the largest survey of its kind with 6,337 participants from 115 countries.

In Bulgaria, we are proud to say that as many as 77 leading companies shared their experience with economic crime and how it impacts on doing business in Bulgaria. This provides us with a unique insight into the current state of economic crime in the country as a whole and the real life impact witnessed by each individual organisation. It also allows us to identify trends and perception of future risks.

Four in ten organisations report that they have been the victim of fraud in the past two years, with 31% reporting losses in excess of USD 100,000. This is significantly higher than the global average and also higher than Bulgaria’s own results from 2014. Hence, economic crime appears to be on the rise, both in frequency and in loss value. Equally frustrating is that asset misappropriation, bribery and corruption are still considered key threats, and that these “old school” crimes are still not better contained.

The fact that there is an increased number of economic crime incidents can be a double-edged sword. It can easily build an impression that there is more fraud than before. On the other hand, however, it can be a result of improved detection tools and stronger determination to deal with the problem. In Bulgaria’s case, we have reason to believe that it is a combination. We see some improvements in the governance models and tools that are implemented. Efforts still appear too fragmented to yield convincing results, however.

The fact that as many as 34% of the incidents were perpetrated by internal people, and mainly by members of junior and middle management, is a clear warning that the compliance and internal control systems are not effective. Since 90% of the respondents insist that they have clearly communicated organisational values, this represents a serious disconnect between policies and actual practices.

Bulgarian organisations overall could clearly benefit from a more systematic approach to fraud risk management. One in four respondents have not performed or updated their fraud risk assessments in the past two years.

We know that economic crime is dynamic and that organisations continuously face new threats in new arenas, and in particular in the overlap between new services, new markets and new technology. Although cybercrime is reported as a key future threat, Bulgarian companies remain largely unprepared. We believe that this is also reflected in the relatively small number of Bulgarian businesses, which report having been the victim of cybercrime. This, unfortunately, may be evidence of poor detection tools and that such crimes are left undetected.