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25 Feb 2016 11:00am

UK economic crime surges

More than half of UK businesses have reported economic crime in the last two years, according to research from PwC

The Big Four firm’s global economic crime survey found organisations’ fears of cybercrime have reached the highest level in six years, with 32% of businesses across 115 countries being victims of cyber breaches.

British businesses are among the worst hit, with the number of reported economic crimes rising from 25% in 2014 to 55% in the past 24 months.

Globally 36% of companies reported economic crime. Cybercrime surged as the second most common offense after asset misappropriation (64%), followed by bribery and corruption (24%).

PwC said the increase in cyber crime is damaging employee morale, while 44% of businesses believe local law enforcement are not adequately trained and resourced to fight economic crime.

The report said that, despite a decline in economic crime reported overall from 37% to 36% for the first time since the financial crisis, the financial costs of these frauds have risen, with 14% of respondents experiencing losses of more than $1m (£0.7m).

Moreover, 34% of organisations believe it is likely that their business will experience cybercrime in the next two years, which will not only lead to financial losses but also hurt their reputation and increase legal, investment and enforcement costs.

However, only 37% of respondents have a fully operational incident response plan in place, and a third have no plan at all.

Despite financial services having the highest level of cybercrime at 52%, more than a quarter of financial firms have not conducted risk assessment for anti-money laundering or fought against financing of terrorism.

The report also found six of the G20 countries – UK, US, Italy, France, Canada and Australia - expect cybercrime to be the largest economic crime threat to businesses within the next two years.

Trevor White, PwC partner in the forensic services team, said, “Tackling economic crime means a strong culture and ethics focus as well as effective monitoring and compliance programs.

“The difference between 90% of CEOs saying their organisations values are clear and understood and only 84% of managers thinking the same shows how gaps can open up between what leaders think and their organisations perceive day to day.”

Andrew Gordon, PwC's global leader in forensic services, said too few companies are adapting their risk assessments and control frameworks fast enough, warning a “passive approach to detecting and preventing economic crime is a recipe for disaster”.

Jessica Fino

 

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