“The risk of fraud is part of doing business. It can even be considered a consequence.”
According to a joint survey of 892 senior executives by Kroll, a risk consulting company, and the Economist Intelligence Unit, the statement above by Andres Antonius, president of Kroll’s consulting group, rings especially true for financial services institutions.
More than 80% of the executives reported a fraud loss at their companies over the past three years. The average fraud loss during this time was $14.6 million—double that of all industries and the highest in the survey.
Financial services executives identified their highest areas of vulnerability as information theft, loss or attack (26%) and management conflict of interest (18%), but reported their most frequent areas of loss to be regulatory or compliance breaches (29%) and internal financial fraud or theft (28%).
In all industries, high staff turnover was the most frequent cause of the increased exposure to fraud, followed by: complex information technology arrangements; an increased collaboration between unrelated companies; and the entry into new markets, particularly for larger corporations, where one in 10 reported losing more than $100 million to fraud.
Source: 2007/2008 Kroll Global Fraud Report, www.kroll.com/fraud.