Manufacturing companies saw a substantial increase in the incidence of fraud, with eight out of the 10 categories of fraud tracked for the report becoming more common this year.
Compared to other sectors manufacturers experienced the highest levels of theft of physical assets (50%), corruption and bribery (29%), management conflict of interest (27%), vendor or procurement fraud (23%) and IP theft (13%). Manufacturing also experienced the highest average loss due to fraud, with businesses who suffered from fraud losing an average of 1.9% of annual revenue.
Other key findings from the report include:
67% of all fraud cases are committed by insiders, up from 60% last year and 55% in 2010.
Information theft remains the second most common fraud, hitting 21% of companies in the last year. 30% of respondents say they are most vulnerable to information theft, and the same number cite IT complexity as the leading cause of increased exposure.
Concern about fraud is dropping faster than fraud itself, suggesting that many companies have become over-confident about their vulnerability to fraud.
Africa retains its position as the region with the largest fraud problem (77%). Outside of Africa, India has the highest number of companies affected by fraud of any region or country (68%), followed by Indonesia (65%).
Developed markets also reported significant levels of fraud. Following Indonesia, the US and Russia tied at 26% for the highest rates of information theft compared with the global average of 21%.
Tommy Helsby, chairman of Kroll Advisory Solutions, Eurasia, said:
“One look at the global headlines in the past year, from LIBOR-fixing in London to accounting fraud in Tokyo, will tell you that fraud continues to be a pervasive issue, and for each story that enters the public consciousness there are many more that don’t.
“Increasingly, fraud exhibits industry-specific and regional characteristics, which require detailed knowledge of a market, sector, business process or culture to unearth, redress and prevent. Companies that get complacent about it do so at their own peril.”
The Economist Intelligence Unit was commissioned to conduct the survey for the the report. More than 800 senior executives worldwide from a broad range of industries and functions were polled in July and August 2012. 28% were based in Europe, 26% in North America, 24% in Asia-Pacific, 13% from Latin America, and 10% in the Middle East and Africa.
