Economic crime in 2014: What’s new under the sun?Follow @PwC_LLP
PwC Global Forensics Services partner, Steven Skalak, reviews the results of our latest survey, maps the CEO connection, and explains why, in a connected world, economic crime is truly a borderless threat.
Think of fraud as a virus. Not only is it probably as old as the human race, it’s also highly adaptable and opportunistic — shifting to ride the events, trends, natural disasters, and innovations remaking our world — and attacking at vulnerable points in your supply chain or distribution network.
In the connected world of 2014, one driven by the increasing use of technology in business functions and the rush of economic resources toward emerging markets, economic crime continues to loom large. At the same time, various government anticorruption statutes have elevated the efforts of regulators.
In this environment, I believe it’s more critical than ever to understand the variety of business processes threatened by economic crime, and the risks you face.
For more than a decade, PwC’s Forensics Services practice has done just that — tracking economic crime through periodic international surveys, and giving us valuable data points to help discern the new economic crime trends that are constantly emerging across sectors and industries.
Our 2014 Global Economic Crime Survey, just released, reveals that the various strains of economic crime — such as corruption and bribery, cybercrime, accounting fraud, IP infringement, or procurement fraud — continue to be major concerns for organisations of all sizes, across all regions, and in virtually every sector. Overall reported economic crime was up three percentage points, and reports of especially damaging categories of fraud — such as bribery and corruption, and cybercrime — increased, relative to our last survey, which was conducted in 2011.
One of the key findings of the survey is that as companies seek growth, they invest in markets that are less familiar to them — and thus frequently expose their employees to situations with inherent conflicts between the fundamental goals of making a profit and remaining compliant. Without strong CEO support and leadership, these situations can erode the integrity of employees.
Increasingly, CEOs are homing in on the threat to their organisations presented by economic crime. Our 2014 Global Economic Crime Survey (GECS) has some revealing tangents to our 17th Annual Global CEO Survey:
- In a sign of how seriously boards and chief executives are taking both the financial and collateral damage from enforcement of statutes like the US Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act, more than half of CEOs (52%) surveyed in this year’s CEO Survey report being concerned about bribery and corruption.
- Underscoring this, nearly half of chief executives in the 17th CEO Survey (a sharp increase from 37% just a year ago) see a “lack of trust in business” as a key marketplace issue, with significant majorities recognising that business has a wider role to play in society than just building shareholder value.
- On the cybercrime front, our Global Economic Crime Survey indicates that the perception of the risk of cybercrime is increasing at a faster pace than was reported in our previous survey — up to 48%, from 39% in 2011. An identical percentage (48%) of CEOs in our Global CEO Survey said they were concerned about cyber-threats, including lack of data security.
- In many industries, intellectual property (IP) infringement and theft — which, depending on circumstances could be classified as asset misappropriation or cybercrime — is an especially crippling economic crime. And it’s very much on the minds of global CEOs, 43% of whom reported they are worried about being able to protect their IP, according to our latest Global CEO Survey.
In addition to outlining all the data from our survey, this year’s GECS report also offers an analytical look, grounded in our real-world experience, at how economic crime threatens your business processes — so you can address the key business issues from both a preventive and strategic perspective.
The perspective, in other words, of a chief executive.
If you’d like additional information on our 2014 Global Economic Crime Survey, including access to the full data and customised reports, please visit www.pwc.com/crimesurvey or contact me at [email protected] or on +1 646-471-5950.
Steven Skalak is an Advisory Services Partner in PwC's Forensic Services practice, based in New York. From December 2009 to June 2012 he was located in PwC’s Beijing office where he led the Forensic Team and the Advisory Consulting practice. Steven provides auditing, accounting, financial and investigative expertise to organisations litigating or arbitrating disputes, defending regulatory inquiries or investigations, and conducting internal investigations.