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India caught napping on fraud

Fraud affects 75% of companies across the world, according to this year’s Kroll Global Fraud Report, with emerging economic superpower India among the worst-hit nations.

About 80% of Indian executives who responded to the survey have been affected. It is equalled by Mexico, while Colombia (83%) and Sub-Saharan Africa (84%) report even higher levels of corporate fraud.

India stands out at the top because it, along with China (73%), is expected to dominate the global economy for most of this century.

The survey shows India has the highest incidence of fraud in four categories: corruption and bribery (25% of respondents), regulatory compliance breaches (20%), intellectual property theft (15%) and money laundering (7.5%).

The global averages in these four areas are 11%, 12%, 4% and 4% respectively.

Kroll MD and Head of South Asia Reshmi Khurana says despite the danger – and the fact 77% of Indian executives consider themselves vulnerable to further vendor, supplier or procurement fraud – companies in India are not investing in anti-fraud strategies.

Only 55% of companies in India have invested in vendor due diligence, and just 28% invest in staff background screening, the global risk consultant says.

Worldwide, the biggest threat comes from within. Of the companies that reported fraud with identified perpetrators, 81% suffered at the hands of at least one insider.

“India Inc is highly susceptible to insider fraud and I believe companies are beginning to understand that they need to do more to mitigate this risk… [but] companies need to do more than just enhance their [recruitment] screening processes,” Ms Khurana said.

“They need to tighten their IT security, develop a strong whistle-blower policy and better understand how insider fraud is committed in their organisation.”