The global financial services industry experienced a dramatic spike in fraud activity, with companies losing an average of $15.2 million over the past three years, according to a new report.
The Kroll Annual Global Fraud Report found that companies lost an average of $8.8 million to fraud over the past three years, an increase over last years $8.2 million in losses. Despite sector-specific spikes and declines in fraud activity, however, the worldwide fraud rate remained steady in 2009.
Fraud levels among various sectors differed significantly, according to the report, in which the Economist Intelligence Unit surveyed more than 700 senior executives for risk-consulting company Kroll. Five industries experienced a rise in fraud losses: financial services; professional services; health care, pharmaceuticals and biotechnology; retail, wholesale and distribution; and travel, leisure and transportation. Five sectors reported declines: manufacturing; technology; media and telecommunications; natural resources; and consumer goods and construction.
The Middle East and Africa experienced the worst fraud levels of all regions, with companies losing an average of $11.5 million and seeing the highest incidence rate in seven out of the 10 types of fraud. North America was no longer the low-fraud leader, with seven out of 10 fraud incidences showing an increase over 2008 figures. Companies experiencing internal financial fraud and financial mismanagement rose substantially. However, theft of physical assets, corruption and vendor fraud were lower than in any other region.
Larger companies with annual sales of over $5 billion reported greater average losses, rising to $25.8 million from $23.3 million in 2008, while the situation improved for smaller businesses with yearly revenue under $5 billion, dropping to $4.6 million from $5.5 million last year.
The full report is available at www.kroll.com/fraud.
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