PremiumNEW DELHI: Disruptions caused by the Covid-19 pandemic have led to 95% of Indian companies being affected by new types of fraud, according to the findings of a survey by PricewaterhouseCoopers (PwC).
“Following the outbreak of the Covid-19 pandemic, organizations faced a huge amount of uncertainty, and a majority of them shifted to digital operations in order to minimise disruption. With employees working from home, companies were exposed to new risks related to digital security, employee safety and disinformation, and this in turn led to new incidents of fraud," the report said.
“52% of Indian companies experienced fraud or economic crime in the last 24 months and an overwhelming 95% of these have experienced new types of fraud as a result of the disruption caused by COVID-19,"it added.
“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," said Puneet Garkhel, partner and leader, Forensics Services, PwC India, said.
“Among the organisations that encountered fraud in the last two years, 12% experienced ESG reporting fraud, 9% experienced anti-embargo fraud, and 19% experienced supply chain fraud. 67% of companies that experienced fraud reported that the most disruptive incident came via an external attack or collusion between external and internal sources," said PwC’s Global Economic Crime and Fraud Survey 2022.
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.
Among 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 amongst big firms: 60% of companies surveyed in India having global annual revenues above $1 billion experienced fraud during the past 24 months (globally, 52% of organisations with revenues over $10 billion experienced fraud).
The impact on smaller companies was less extensive as only 37% of companies in India with global annual revenues below $100 million experienced fraud during the past 24 months.