GCC companies see significant rise in fraud and risk incidents: Report

ABU DHABI -- Fraud, cyber, and security incidents are now the "new normal" for companies in the Gulf Cooperation Council, GCC, according to the executives surveyed for the 2016/17 Kroll Annual Global Fraud and Risk Report.

The proportion of executives that reported their companies fell victim to fraud in the past year rose significantly to 88 percent, from 62 percent in 2015, highlighting the escalating threat to corporate reputation and regulatory compliance, showed the report which includes a full detailed industry analysis across a range of fraud categories and regions, said global provider of risk solutions Kroll.

The Gulf region saw the highest rise in fraud incidents of any region across the world. Cyber incidents were even more commonplace with 90 percent of executives surveyed saying their company has suffered a cyber incident over the past 12 months. Over eight in 10 (82 percent) reported the occurrence of at least one security incident over the course of the year.

Despite widespread concerns about external attacks, the findings reveal that the most common perpetrators of fraud, cyber, and security incidents over the past 12 months were current and former employees.

Senior or middle management were cited as key perpetrators in two-fifths (36 percent) of fraud cases, followed by junior staff (34 percent). Third party entities were also considered to have significant roles in most fraud incidents, with joint venture partners, vendors, suppliers and agents names by around a quarter of respondents. Former employees were also identified as responsible for 20 percent of incidents reported.

Over half of respondents (56 percent) said insiders were the key perpetrators of security incidents, with permanent employees the most common of these (24 percent).

Tom Everett-Heath, Regional Managing Director, commented, "The impact of such incidents is significant, with punitive effects on company revenues, business continuity, corporate reputation, customer relations, and employee morale, as well as the risk of regulatory intervention.

"With fraud, cyber, and security incidents becoming the new normal for companies all over the world, it's clear that organisations need to have systemic processes in place to prevent, detect, and respond to these risks if they are to avoid reputational and financial damage."

The incidence of fraud in the GCC was 6 percent above the global average of 82 percent. The vast array of perpetrators and ever-evolving nature of incidents also reflect an increasingly complex risk management environment across the region.

A broad range of cyber incidents were reported. The single most common types of incident reported was a virus or worm infestation, reported by almost one-third of all companies (30 percent) and data deletion or loss due to system issues (30 percent).

In the age of big data, a fifth (20 percent) of respondents said data breaches resulted in loss of customer or employee data, while 16 percent reported loss of IP, trade secrets, or R&D. More than one in four (26 percent) suffered data deletion or corruption caused by malware or system issues, and 10 percent were victims of data deletion by a malicious insider, Kroll said.

While insiders are cited as the main perpetrators of fraud, they are also the most likely to discover it. Half (50 percent) of respondents in the GCC said that a recent fraud had been discovered through a whistleblowing programme, and 30 percent said it had been detected through an internal audit.

Daniel Turner, an Associate Managing Director in Kroll's Dubai office, commented," These risks can be mitigated through the adoption of a conscious and proactive approach and through the implementation of employee and partner education programmes and a tighter set of policies that help remove avoidable errors and poor business practices."

Source: Emirates News Agency