95% Indian companies experiencing new types of fraud after Covid
- The disruptions caused by the Covid-19 pandemic have led to 95% of Indian companies being affected by new types of
fraud, says a PwC survey.
- This includes customer and
KYCfrauds, with Indian companies more impacted by these frauds than their global counterparts.
- While the threat of frauds has risen, Indian organisations’ fraud prevention measures have yielded results, with the number of victim companies falling to 52% from 69% in 2020.
AdvertisementThe disruptions caused by the Covid-19 pandemic have led to 95% of Indian companies being affected by new types of fraud, according to the findings of a survey by PricewaterhouseCoopers (PwC), suggesting that
“Following the outbreak of the Covid-19 pandemic, organisations faced a huge amount of uncertainty, and a majority of them shifted to digital operations in order to minimise disruption. With employees working from home, companies were exposed to new risks related to digital security, employee safety and disinformation, and this in turn led to new incidents of fraud,” said PwC's Global Economic Crime and Fraud Survey 2022.
Amongst the key risks arising out of these disruptions include misconduct and platform risk. While misconduct risk refers to the possibility of a financial loss, platform risk is far more severe and refers to the possibility of the platform ceasing to operate.
According to the report, 67% of the companies surveyed reported new frauds involving misconduct risk, 38% reported platform risk.
The survey included 112 Indian companies from industries such as technology, media and communications, health, financial services, retail among others.
Customer frauds top the list, with cybercrime a close second
Customer frauds like frauds involving mortgages and credit cards, among others, topped the list of frauds. According to the report, 47% of the polled companies reported customer frauds as the top fraud, while cybercrime came in a close second at 45%.
Know your customer (KYC) failures, wherein the organisations don’t have adequate controls in place to verify customer information, stood at 34%.
Fraud prevention measures yield results, but 42% companies still lost over $1 million
Indian companies employed measures to prevent frauds and that has started reflecting in the results – according to the report. As many as 52% of Indian organisations encountered frauds or economic crimes in the last 24 months, down from 69% in 2020.
However, 42% of the companies in the survey still experienced financial losses of $1 million or more, while 40% of the companies lost between $50,000-1,00,000.
AdvertisementOverall, bigger Indian firms with global annual revenue of $1 billion or more were the most lucrative targets, with 60% of these companies facing frauds and economic crimes in the last 24 months.
Rise in frauds from external actors, and internal-external perpetrators colluding
While tools like code of conduct are useful in minimising incidences of fraud from internal perpetrators, the survey findings highlight that the proportion of external actors, and internal-external actors colluding to commit frauds increased in the last 24 months.
While the share of external actors and collusion between internal and external perpetrators stood at 56% in 2020, it increased to 67% in 2022, according to the report.
Amongst external perpetrators, 49% were hackers while 41% were customers of the organisation.
From customer frauds to KYC failures, here’s what organisations need to watch out for
Customer frauds, KYC failures, and supply chain disruptions are amongst the emerging threats that organisations need to watch out for going forward, according to the report.
Advertisement“Given the low level of digital literacy in India, KYC and customer frauds can prove to be a far greater risk for organisations in the future,” the report said.
The rise in global sanctions also pose a risk of anti-embargo frauds, making them another key emerging threat. These frauds trick organisations into either breaking sanctions or participating in unsanctioned boycotts. While only 9% of the organisations were victims of this fraud, the rising global sanctions could change this, says the report.
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