Fraudsters target knowledge assets to defraud companies
Dec 03 2012
Financial services, real estate, industrial markets worst affected
Worst still, companies are now weaving in the losses through fraud as cost of doing business, said a survey on frauds in India done by KPMG India.
The survey underlined the shift in frauds landscape with fraudsters increasingly targeting organisations’ knowledge (data, code, among other things) and not physical assets to defraud companies.
“The worst effected sectors include financial services, information and entertainment, real estate, infrastructure and industrial markets,” the survey said.
“Frauds are evolving everywhere but it is still less in India as compared globally. However, 71 per cent of respondents in India now believe that frauds are an inevitable cost of doing business as compared to 2010,” Richard Rekhy, chief executive officer of KPMG in India said.
Though there is no confirmation, rough estimates suggest that some companies now set aside three-four per cent of their overall expenditure as fraud-related expenses in the wake of rising number of such cases. Besides, losses tend to be three times higher if senior management is involved.
Of late, there has been increasing number of frauds in India starting from Satyam, Citibank, Commonwealth Games, Reebok and now Bharti-Walmart.
Highlighting the under-preparedness among companies to tackle fraud, the survey noted that nearly 78 per cent respondents were unaware of the risks associated with IP infringement, counterfeiting or piracy.
In case of cyber crime, 40 per cent respondents said their companies did not have specific guidelines on the kind of information that could be shared on social media.
Around 53 per cent respondents said they had faced identity theft (either by way of password sharing, social engineering or mal-wares) and yet did not have a policy to mitigate these incidences.
The survey found out that setting up of whistleblower hotline, conducting internal audits and data analytics are the most effective ways to detect fraud.
The KPMG India Fraud survey that is done once in two years, has been conducted this time by sending questionnaires to 1,500 companies, both in public and private sectors. However, only 293 companies responded, of which nine per cent were public sector companies.