Fraud and Risk incidents on rise

According to the latest Fraud and Risk report issued by Kroll, “the fraud, cyber, and security incidents are on the rise and is the “new normal” for companies in the Gulf region. The proportion of executives that reported their companies fell victim to fraud in the past year rose significantly to 88%, from 62% in 2015, highlighting the escalating threat to corporate reputation and regulatory compliance. The Gulf region saw the highest rise in fraud incidents of any region across the world.”

Cyber incidents were even more commonplace with 90% of executives surveyed saying their company has suffered a cyber incident over the past 12 months. Over eight in 10 (82%) reported the occurrence of at least one security incident over the course of the year.

The threat from within
Despite widespread concerns about external attacks, the findings reveal that the most common perpetrators of fraud, cyber, and security incidents over the past 12 months were current and former employees.

Senior or middle management were cited as key perpetrators in two-fifths (36%) of fraud cases, followed by junior staff (34%). Third party entities were also considered to have significant roles in most fraud incidents, with joint venture partners, vendors, suppliers and agents names by around a quarter of respondents. Former employees were also identified as responsible for 20% of incidents reported.

Over half of respondents (56%) said insiders were the key perpetrators of security incidents, with permanent employees the most common of these (24%).

In a statement the company said that with fraud, cyber, and security incidents becoming the new normal for companies all over the world, it’s clear that organizations need to have systemic processes in place to prevent, detect, and respond to these risks if they are to avoid reputational and financial damage. As important is the need for effective, thorough and timely responses when incidents are detected.

Increasingly complex threats
The incidence of fraud in the GCC was 6% above the global average of 82%. The vast array of perpetrators and ever-evolving nature of incidents also reflect an increasingly complex risk management environment across the region.

A broad range of cyber incidents were reported. The single most common types of incident reported was a virus or worm infestation, reported by almost one-third of all companies (30%) and data deletion or loss due to system issues (30%).

In the age of big data, a fifth (20%) of respondents said data breaches resulted in loss of customer or employee data, while 16% reported loss of IP, trade secrets, or R&D. More than one in four (26%) suffered data deletion or corruption caused by malware or system issues, and 10% were victims of data deletion by a malicious insider.

The road to resilience
While insiders are cited as the main perpetrators of fraud, they are also the most likely to discover it. Half (50%) of respondents in the GCC said that a recent fraud had been discovered through a whistleblowing program, and 30% said it had been detected through an internal audit.

Indeed, a majority of respondents indicated that their companies have adopted employee-focused anti-fraud measures such as staff training or whistleblowing hotlines. Almost three-quarters of respondents have adopted anti-fraud measures focusing on information such as IT security or technical countermeasures, and 68% have implemented physical security measures.

The associate managing director at the Dubai office of Kroll, Daniel Turner said “The incidence of fraud, cyber and security incidents in the region continues to climb markedly. Companies are increasingly operating in a global business environment fraught with high and mounting risks and repercussions. These risks can be mitigated through the adoption of a conscious and proactive approach and through the implementation of employee and partner education programs and a tighter set of policies that help remove avoidable errors and poor business practices.”