India - the Threat Within: Insider Fraud on the Rise

"80% of Indian executives were affected by fraud in the past year, according to the Kroll Global Fraud Report 2015-2016. India has the highest incidence of fraud globally, in 4 out of the 11 fraud types."

Globally, three quarters of companies (75%) have fallen victim to a fraud incident in the past year, a rise of 14 percentage points in just three years, according to the Kroll Global Fraud Report 2015-2016¹. The findings reveal the biggest fraud threat to companies comes from within. Of those companies where fraud occurred and the perpetrator was identified, four in five (81%) suffered at the hands of at least one insider, up from 72% in the previous survey.

In India, 80% of the India-based executives who responded to the survey were affected by fraud. This marked a 11% increase since the last report. Of all the countries surveyed, India had the highest incidence of fraud in four categories - corruption and bribery (25% of companies), regulatory compliance breach (20%), IP theft (15%) and money laundering (7.5%).

Reshmi Khurana, Managing Director and Head of South Asia for Kroll, commented: “India has one of the highest incidence of fraud (4 out of the 11 fraud types) assessed by the survey. Further, 92% of Indian respondents have confirmed that their firms have seen an increased exposure to fraud in the last year. This is consistent with our experience on-the-ground in India. Despite these rising concerns, companies in India are not investing in the appropriate anti-fraud strategies. Companies must continue to create strong and well-organized fraud detection systems to prevent, respond to, and investigate fraud when it arises. This will help improve the ease of doing business in India.”

Percentage of Companies Affected by Different Types of Fraud in the Past 12 Months
Type of Fraud	India	Global Average
Theft of physical assets	17.50%	22%
Vendor, supplier or procurement fraud	22.50%	17%
Information theft	7.50%	15%
Management conflict of interest	12.50%	12%
Regulatory or compliance breach	20%*	12%
Corruption and bribery	25%*	11%
Internal financial fraud	17.50%	9%
Misappropriation of company funds	5%	7%
Money laundering	7.50%	4%
IP theft	15%	4%
Market collusion	2.50%	2%

* Highest among the countries surveyed

In a global marketplace where many international businesses have thousands of companies in their supply chain, risks become more difficult to identify and keep under control. Executives say their companies are particularly at risk of threats such as vendor, supplier or procurement fraud, with half of respondents (49%) feeling highly or moderately vulnerable to this type of incident. For India, 77% of the respondents felt that they were vulnerable to such fraud, the highest amongst all countries surveyed.

Despite vulnerabilities to suppliers and a high proportion of fraud being perpetrated by insiders, only 55% of the companies in India have invested in vendor due diligence and only 28% invest in staff background screening. Reshmi Khurana added: “India Inc. is highly susceptible to insider fraud and I believe companies are beginning to understand that they need to do more to mitigate this risk. While it is crucial to deal with this issue in the recruitment process, to truly safeguard against insider fraud, companies need to do more than just enhance their screening processes. They need to tighten their IT security, develop a strong whistle-blower policy and better understand how insider fraud is committed in their organization. This will help curtail future occurrences of fraud”.

Tommy Helsby, Chairman, Kroll, commented: “Much media attention is focused on external threats to companies, highlighted by high profile cyber-attacks, but the evidence revealed in our report and our day to day experience tells a different story. The respondents in this survey indicate the greatest single cause of fraud in their companies is their own employees. It is not enough for companies to protect themselves from outside threats – both external and internal vulnerabilities need to be addressed.”

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Contacts:

India
Genesis Burson-Marsteller
Gitanjali Sabikhi | +91 98202 11064 | [email protected]
Abhishek Sood | +91 98193 93566 | [email protected]
Shreya Sharma | +91 98336 63673 | [email protected]

Asia
Kroll
Vanessa Frida | +65 6645.4947 | [email protected]

Sources:
¹The Kroll Global Fraud Report 2015-2016 includes a full detailed industry analysis across a range of fraud categories and regions.

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 rel="noopener noreferrer" America and 12% from the Middle rel="noopener noreferrer" East/Africa.
Please click here for key findings and graphics, including a detailed look at the industries, regions and types of fraud covered in the report.

About Kroll:
Kroll is the leading global provider of risk solutions. For more than 40 years, Kroll has helped clients make confident risk management decisions about people, assets, operations, and security through a wide range of investigations, cyber security, due diligence and compliance, physical and operational security, and data and information management services. Headquartered in New York with more than 50 offices across nearly 30 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.

India - the Threat Within: Insider Fraud on the Rise

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