More than 50 per cent of Indian companies experienced an economic crime in the last 24 months and 95 per cent of them suffered new types of fraud as a result of the disruption caused by Covid-19, said a report on Tuesday.
Prevention measures by companies brought down such incidents from 69 per cent in 2020 to 52 per cent in the last two years, according to PwC’s ‘Global Economic Crime and Fraud Survey 2022: India Insights’.
As many 60 per cent of Indian companies having global annual revenues above $1 billion experienced fraud in the past 24 months. Among companies with global annual revenues below $100 million 37 per cent experienced fraud during this period.
Customer fraud–involving mortgage, credit cards, claims, cheques–was reported by 47 per cent of companies. Cybercrime came second, with 45 per cent companies reporting such incidents. KYC failure was reported by 34 per cent Indian firms experiencing financial crime.
Nearly 67 per cent of Indian organisations that experienced fraud reported that the most disruptive incident came via an external attack or collusion between external and internal sources. The proportion was 56 per cent in PwC’s 2020 survey.
New types of fraud experienced by companies include misconduct risk, which accounted for 67 per cent of reported incidents, legal risk at 16 per cent, cybercrime at 31 per cent, insider trading at 19 per cent, and platform risk at 38 per cent.
As many as 12 per cent organisations experienced ESG reporting fraud which alters disclosures to misrepresent the activities or progress of an organisation.
As many as 9 per cent experienced anti-embargo fraud which involves participation in unsanctioned foreign boycotts, or when an organisation is tricked into breaking an embargo, and 19 per cent experienced supply chain fraud.
Misconduct was the biggest challenge faced by organisations, referring to bad actors collaborating and taking advantage of pandemic-related uncertainty and volatility. Conduct risk, associated with individuals within the firm, or vendors, agents and customers, was the biggest threat at 90 per cent.
Businesses have been exposed to new risks related to digital security, employee safety and disinformation due to uncertainties created by the pandemic and the subsequent shift to digital operations and remote working.
Puneet Garkhel, partner and leader, forensics services, PwC India, said businesses must continually focus on policies, training and internal controls. “It is increasingly becoming important for organisations to understand the end-to-end life cycle of customer-facing products and also strike a balance between user experience and fraud controls. Over time, formidable actors become better at exploiting cracks,” he said.