March 9, 2004 by Canadian Underwriter
Economic crime, and cybercrime in particular, are on the rise, says a new survey by PriceWaterhouseCoopers LLP. The consulting firm says more than one-third of companies report being a victim of fraud in the last two years, a figure much higher than in earlier surveys. And Canada was particularly hard hit, with almost one-half of the 100 companies surveyed saying they have been a victim of economic crime.
Many of the crimes reported were related to technology, including product piracy (19%), cybercrime (15%) and industrial espionage (7%). Misappropriation of assets remains the top crime at 60%, by many of these incidents also involved the use of electronic data.
While the crimes may be economic in nature, the damage from them remains difficult to quantify. In cases where quantification was possible, the average loss from economic crime is US$2.2 million, while cybercrimes cost at least US$800,000 on average. And, “the negative impact on corporate reputation, brand image and staff morale can be more important than the direct financial loss”, adds Bruce Webster of PWC’s investigations and forensic services group.
Another challenge is uncovering economic crime, with more than one-third of incidents being discovered by chance. About one-half are uncovered by audits, one-quarter by whistleblowers, and the rest by internal risk management systems. While about 60% of companies are confident in their existing fraud control systems, less than one-third have fraud-related training programs.
The results highlight the need for companies to deal more openly with economic crime, and steer away from the “it can’t happen to me” attitude, PWC concludes.