As the digitisation of business extends to ever more products and services, the related risks rise in tandem. Our 2018 Global Economic Crime and Fraud Survey finds that one-third of all respondents worldwide have been targeted by cyber-attacks in the past two years, through malware and phishing. And many of these attacks lead to substantial losses: 24% of respondents who experienced cyber-attacks suffered asset misappropriation, and 21% had money extorted from them.
What’s more, organisations don’t expect the escalation of cyber threats to end any time soon. Cybercrime was more than twice as likely than any other fraud to be identified as the most disruptive economic crime likely to impact organisations. Some 26% of respondents said they expected to experience a cyber-attack in the next two years and that it would be the most disruptive, well ahead of bribery and corruption at 12% and asset misappropriation at 11%, respectively.
Such findings underline the risks that technology brings around fraud. But it also opens up major opportunities to tackle fraud of all kinds more effectively and efficiently. As the animated graphic below shows, growing numbers of organisations worldwide are using – and finding value from – technologies like artificial intelligence (AI) and advanced analytics as part of their efforts to combat and monitor fraud.
Interestingly, our survey shows that companies in emerging markets are currently investing in advanced technologies such as artificial intelligence at a faster rate than their counterparts in developed markets: 27% of organisations in developing markets currently use or plan to implement AI to combat fraud, versus 22% in developed markets. This may reflect a drive by emerging-market players to catch up in an area where developed territories have already made heavy investments. Whatever the reason for the disparity, it’s clear that the rising use of innovative technologies to combat fraud is now a global phenomenon.
Indeed, the growing ubiquity of technology across all business processes – including customer-facing ones – means that striking the right balance between security and accessibility is now central to creating a compelling customer experience. When customers get too many false fraud alerts from a company they deal with online, or have to wade through what they regard as onerous security procedures, their immediate reaction is generally not one of gratitude for superior information security, but annoyance.
This annoyance is customer friction. And it’s a growing challenge for organisations as they seek to navigate the best path between acting on all fraud red flags, and giving their customer an easy, convenient experience. For companies that get the balance between security and customer experience right, the returns from investing in fraud technology go beyond protecting against reputational, regulatory or financial damage. They also include lower fraud prevention costs, greater capacity to build and sell new products and services safely on a digital platform, and an ability to fine-tuning fraud programmes to reduce customer friction. So investments in anti-fraud technology – if done well – are a win-win benefiting both costs and revenues, as well as protecting against fraud.
Principal, Global Economic Crime and Fraud Survey Leader, PwC United States
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