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Do automotive companies take cybercrime more seriously than other industries?
15 June, 2018
Is fraud on the rise, or just our awareness of it? That is what we set out to learn in PwC’s 2018 Global Economic Crime and Fraud Study. The full study received input from more than 7,000 respondents across 120+ territories, with more than 200 clients and third-party participants in the automotive industry. A majority of our respondents said they have been targeted by malware and phishing scams in recent years, leading to an expectation that cybercrime will continue to be the largest threat to the automotive industry. This is all for good reason, as one wrong click on a computer, a misused password or opening an unknown email can derail an entire network. Here are some of the takeaways from this year’s study:
Driving forward
- Cybercrime: When thinking about the next two years, cybercrime was viewed as the biggest threat to auto respondents, with 18% believing this will most likely impact their organization. While this is viewed as the most significant threat, it is below the global average of 26%.
- Bribery and Corruption: This was viewed as a close second to cybercrime, with 13% stating this will be the most disruptive fraud to their company.
- Intellectual Property: Automotive companies appear to have their guard up when it comes to protecting against I.P. theft; twice as likely to have an impact on their companies compared to global organizations.
- Fighting Fraud: The writing is on the wall for the automotive industry to bulk up their budgets against fraud, 32% expect their organizations to increase spending to thwart these crimes.
Rear-view mirror
- Overall Fraud: A majority of respondents said their company has experienced fraud in the past two years.
- Malware and Phishing: More than two-thirds of respondents said their organizations were targeted by these two threats.
- Risk Assessment: 53% performed a general fraud risk assessment in the last two years, in line with global respondents. Worth noting, 19% performed anti-competitive and anti-trust assessments compared to 16% of global respondents.
- Anti-Money Laundering: It appears that this is not a main concern for automotive companies, as they were more than half as likely to have performed a risk assessment specific to AML in the last two years.
Digesting all of this information, what does it mean and what can you do? Here are four steps automotive organizations can take to fight future fraud:
- Recognize fraud when you see it – There is an increase in awareness of fraud as more companies understand what “fraud” actually means. But every organization, no matter how vigilant, is still vulnerable to blind spots, and because they only become apparent with hindsight, it’s important to shed light on them as early as possible to enhance fraud fighting efforts. This can include actions like a CTO emailing the organization on safe practices and what to look out for, or even putting together an internal phishing exercise to raise awareness on how easy it is to infiltrate a computer or network.
- Take a dynamic approach – The C-suite can no longer claim ignorance as an excuse when the financial costs of fraud impact their business. Today’s enterprises are increasingly embedding their newly reinforced fraud prevention measures, such as risk management, legal and compliance, into their first line of defense. This is an important development, and the more a company learns to react to micro-disruptions effectively, the better prepared it is for responding to mega-crises.
- Harness the protective power of technology – As companies recognize fraud as first and foremost a business problem, many have made a strategic shift in their approach to technology, making a business case for robust new investments in areas such as detection, authentication and the reduction of customer friction. However, technology is expensive to buy and to adopt across a large organization, so it’s critical to think through which emerging/disruptive technologies will work best for an organization.
- Invest in people, not just machines –Technology is clearly a vital tool to fight against fraud, but it can only ever be part of the solution, particularly when it comes to combatting internal fraud. The three principle drivers of internal fraud, or the “fraud triangle,” are incentive, followed by opportunity, and then internal rationalization. Since all three of these drivers must be present for an act of fraud to occur, each of them should be addressed individually. By establishing a culture of honesty and openness from the top down, they can instill open accountability with employees and prevent fraud. This includes preventing rationalization through surveys, focus groups and in-depth interviews to assess the strengths and weaknesses of a culture. Consistent training is also key. If people clearly understand what constitutes an unacceptable action, and more importantly why, they will have a harder time rationalizing fraudulent activity.
Click to access the automotive industry findings from PwC’s 2018 Global Economic Crime and Fraud Survey.
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