February 24, 2014 by Canadian Underwriter
More than one in three Canadian respondents reported their businesses were subject to economic crime, and more than one in ten of those said economic crime cost their companies more than $5 million, a new report from PricewaterhouseCoopers LLP suggests.
PwC published Monday the Canadian supplement to its 2014 Global Economic Crime Survey (GECS). In 2014 36% of Canadian respondents reported their firms had been victims of economic crime, up from 32% in 2011.
Cybercrime was listed as one of the top five economic crimes, with 22% of Canadian respondents saying their firms had been victims.
“We have to also consider that a significant percentage of those who did not report cybercrime may have suffered an event – and not even know about it,” stated Steven Henderson, PwC Canada’s national forensic services leader, in a press release Friday. “The bottom line is that much of the damage created by these attacks is not disclosed.”
The most common economic crime was asset misappropriation, defined as theft of assets including monetary, cash, equipment and supplies, by employees or directors. Fifty-eight per cent of Canadian respondents who were victims of economic crime reported they had been subject to asset misappropriation. One in three reported they had been subjected to procurement fraud while 14% of Canadian respondents reported experiencing bribery or corruption (compared to 27% of global respondents).
When asked whether their company had been asked to pay a bribe, 15% of Canadian respondents said yes, 64% said no and 21% reported they did not know. When asked if their company “recently pursued” a market with a high corruption risk, 38% said yes, 56% said no and 6% said they do not know.
“Both domestic and foreign bribery and corruption has become a major concern in Canada over the past few years,” Henderson stated. “Companies face not only investigative costs, penalties and fines, but could face long-term reputational damage impacting the value of the company. It is critical for Canadian companies to ensure they assess their current bribery and corruption risk, and implement a robust anti-bribery and corruption compliance program to address these risks.”
For all economic crimes, no Canadian respondents reported financial losses of more than $100 million, while 11% reported losses of $5 million to $100 million. Forty-four per cent reported losses of $100,000 to $5 million, while 42% said their losses were less than $100,000.
When asked to estimate losses from cyber crime, 45% of respondents said they had no loss while 17% said they did not know. One in four reported losses of up to $50,000. All figures are in United States currency. Four per cent each reported losses of $50,000 to $100,000, and of $100,000 to $1 million, while 1% reported losses of $1 million to $5 million. An additional 4% of Canadian respondents reported cyber crime losses of $5 million to $100 million.
“Typical” cyber crimes include distribution of viruses, illegal downloads of media, phishing and pharming and theft of personal information, according to the report.
“According to Canadian survey respondents, more than half (61%) of fraud perpetrators were internal and 39% were external,” PwC stated. “The survey found that the profile of a typical fraudster is middle-aged with a college education or higher who has been with the organization for a substantial amount of time.”