The PwC’s recent report Global Economic Crime and Fraud Survey 2022: India Insights reflects the new frauds that organisations faced.
Following the outbreak of the COVID-19 pandemic, the uncertainties associated with it, and the subsequent shift to digital operations and remote working, businesses have been exposed to new risks related to digital security, employee safety, and disinformation.
The new incidents of fraud:
- 52% of Indian companies experienced fraud or economic crime in the last 24 months
- An overwhelming 95% of these have experienced new types of fraud as a result of the disruption caused by COVID-19.
- Nearly 67% of organisations in India that experienced fraud reported that the most disruptive incident came via an external attack or collusion between external and internal sources. This proportion was 56% in our 2020 survey.
On the bright side, companies in India have been undertaking fraud prevention measures to combat fraud which are working – 52% of Indian organisations experienced fraud or economic crime within the last 24 months, as opposed to 69% in our 2020 survey.
Puneet Garkhel, Partner and Leader, Forensics Services, PwC India, said, “With organisational perimeters becoming more vulnerable over the past two years, it is imperative for businesses to not only continually focus on policies, training, and internal controls but also prioritise investing in sophisticated technologies to manage and mitigate the evolving nature of frauds.”
“It is increasingly becoming important for organisations to understand the end-to-end life cycle of customer-facing products and also strike a balance between user experience and fraud controls. Over time, formidable actors become better at exploiting cracks”, Puneet Garkhel added.
The new types of fraud experienced by companies include misconduct risk (67%), legal risk (16%), cybercrime (31%), insider trading (19%), and platform risk (38%).
Misconduct was the biggest challenge faced by organisations as bad actors began collaborating and taking advantage of pandemic-related uncertainty and volatility. Amongst organisations that reported fraud, conduct risk (or risks associated with individuals within the firm, or vendors, agents, and customers) was the biggest threat at 90%.
Fraud and economic crimes impact both big and small firms. However, the survey found fraud to be more prevalent among big firms:
- 60% of companies surveyed in India having global annual revenues above USD 1 billion experienced fraud during the past 24 months (globally, 52% of organisations with revenues over USD 10 billion experienced fraud).
- The impact on smaller companies was less extensive as only 37% of companies in India with global annual revenues below USD 100 million experienced fraud during the past 24 months (global: 38%).
The 2020 survey found cybercrime, accounting/financial statement fraud, and bribery and corruption to be the top three frauds in India. Though globally, the findings of this year’s survey are similar to those of our 2020 survey, for India, the top frauds have changed significantly.
In India, customer fraud (e.g. fraud involving mortgages, credit cards, claims, and cheques) was the top fraud reported by 47% of companies.
Cybercrime came a close second, with 45% of Indian organisations reporting this type of fraud. Further, KYC failure was experienced by 34% of Indian firms that experienced fraud, corruption, or economic/financial crime in the last 24 months.
