The India supplement of Global Economic Crime Survey 2011 conducted by PwC unearths impact of emerging cyber threats along with other white collar crimes.

• Cyber crime ranks as one of the top four type of economic crime perpetrated largely by insiders in the Indian organisations.
• Asset misappropriation has not only been the most common type of economic crime but has also shown a steady increase from 20% in 2007 to 68% in 2011.

Twenty four percent of Indian organisations experienced economic crime in the last 12 months as compared to 18% in 2009 (with most of them believing it to increase in the next one year) according to the respondents of the India supplement of PwC’s Global Economic Crime Survey 2011 released today. Incidentally the number of companies reporting economic crime in India in the last 12 months, is only 24% as compared to 34% globally. This shows that Indian companies seem to have a higher tolerance for economic crime such as bribery and corruption with the general perception of these being necessary for survival.

Commenting on the report, Vidya Rajarao, Leader Forensic Services, PwC India said:

“Identifying and responding to incidents of fraud continues to be a challenge for even the most sophisticated organisations. Economic crime remains intractable because of the very nature of fraud, the many kinds of fraud including some ‘new age’ frauds and the correspondingly broad range of fraudsters who commit them. However, as this survey also demonstrates, the risk of fraud can be mitigated by effective controls, a strong culture of prevention and deterrence and assertive action when cases arise.”

Though the direct cost of economic crime to an organisation can be difficult to gauge, nearly 32% of the respondents reported losses exceeding INR 50 lakh to the organisation.

Cyber crime

• Cyber crime has emerged as one of the top four type of economic crime in India. Frequent advancements in technology are increasing the universe of cyber crime. Moreover, increased media attention around recent cyber crime cases has lead to a heightened awareness on this type of fraud.
• More than half of the respondents (58%) perceive Information Technology as a higher risk department with respect to committing cyber crime followed by Marketing and sales (50%) and Operations (44%).
• In India an overwhelming number of respondents (55%) are concerned about reputational damage, IP theft (52%) and actual financial loss (48%) due to cyber crime, much higher than global figures. However, despite the awareness on the risks and increase in media attention around cyber crime, 34% of the respondents do not review risks at all or are not aware of the risks posed by cybercrime to the organisation.
• Eighty one percent of the Indian respondents cited cyber crime threat to be originating from within and outside India. This indicates that Indian companies feel that the greatest external threat of cybercrime is actually localised and originating at home.

Other findings

• Economic crime unawareness levels have increased from 6% in 2009 to 10% in 2011. This is an adverse trend, given that majority of our respondents were key decision makers at their organisation.
• Nearly two-thirds of the respondents (60%) found that the perpetrators were among their own staff.
• The effects of such economic crime have led to decline in employee morale by 36% of the respondents.
• More than half of the perpetrators were employed by the organisations that were victims of economic crime.
• Despite the growing confidence that organisations surveyed have in their risk management systems most fraud (35%) is still detected by chance (e.g., through tip-offs).

Notes to the editor

About the survey

Methodology: The sixth Global Economic Crime Survey, 2011 India supplement questionnaire had three sections: a section with general profile questions, a section with comparative questions looking at what organisations had experienced and a section on this year’s special topic on cyber crime. 106 professionals from different industries in India participated in the online survey.

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