NEW YORK--(BUSINESS WIRE)--Seven out of 10 (72%) professional services companies have experienced a fraud incident in the past year, according to the 2015 Kroll Global Fraud Report1.
The findings reveal the most common type of fraud experienced in the sector was corruption and bribery, experienced by 22% of professional services companies, a higher percentage than any other sector. This was followed by internal financial fraud (14%), also the highest figure of any sector, and information theft (13%).
Four in five respondents in the sector (81%) say their exposure to fraud has increased, with the biggest drivers of increased exposure to fraud cited as high staff turnover (20%) and increased outsourcing and offshoring (19%).
The data suggests that the sector’s anti-fraud efforts need to address possible senior and middle management conduct. Professional services firms have above average levels of management conflict of interest (13%) and over half of firms (52%) report themselves moderately or highly vulnerable to that fraud – again the highest in the survey. Similarly, the sector is unusual in being one of only two surveyed where senior and middle management are more likely than junior employees to commit fraud.
Percentage of professional services companies affected by different types of fraud
|Type of fraud||Percentage of companies affected by this in the past 12 months|
|Corruption and bribery||22%|
|Internal financial fraud||14%|
|Management conflict of interest||13%|
|Regulatory or compliance breach||12%|
|Vendor, supplier or procurement fraud||9%|
|Theft of physical assets||7%|
|Misappropriation of company funds||6%|
|Market collusion (price fixing)||3%|
Daniel Karson, Chairman, Kroll, observed: “One of the most telling results from this year’s report is how vulnerable to fraud companies are feeling. In one form or another, the specter of fraud arises in virtually every business relationship. What our report drives home is that fraud is often an “inside job” and that companies must address both internal and external relationships if they are to most effectively protect their money, property and private data.”
“While technology has enabled new ways to perpetrate fraud, our daily work with clients confirms what the report also reveals — that old fashioned theft, bribery and kickbacks are still amazingly effective and pervasive. Human nature being what it is, fraud will always be with us, whether it occurs in a company’s corner office or a world away in its supply chain. However, there are numerous strategies, resources and best practices available to companies that can go a long way toward helping them protect themselves and their investments.”
1The Kroll Global Fraud Report 2015 includes a full detailed industry analysis across a range of fraud categories and regions. To obtain a copy please visit http://www.kroll.com/global-fraud-report
Notes to editors
Kroll commissioned the Economist Intelligence Unit to conduct a worldwide survey on fraud and its effects on business. Survey results were gathered between January and March 2015. A total of 768 senior executives took part in the survey from a wide range of industries, including Financial Services; Professional Services; Retail and Wholesale; Technology, Media and Telecommunications; Healthcare and Pharmaceuticals; Travel, Leisure and Transportation; Consumer Goods; Construction, Engineering and Infrastructure; Natural Resources; and Manufacturing.
Respondents were senior, with 50% at the C-suite level. Over half (51%) of participants represent companies with annual revenues of over $500 million.
Respondents this year included 29% from Europe, 25% from North America, 24% from the Asia-Pacific region, 10% from Latin America and 12% from the Middle East/Africa.
Please click http://www.kroll.com/global-fraud-report for key findings and graphics, including a detailed look at the industries, regions and types of fraud covered in the report.
Kroll is the leading global provider of risk solutions. For over 40 years, Kroll has helped clients make confident risk management decisions about people, assets, operations and security through a wide range of investigations, due diligence and compliance, cyber security, and data and information management services. Headquartered in New York with more than 53 offices across 28 countries, Kroll has a multidisciplinary team of over 2,000 employees and serves a global clientele of law firms, financial institutions, corporations, non-profit institutions, government agencies and individuals.