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Friday, Oct 19, 2012

Business

Businesses in Asia more likely to be hit by fraud: Survey

Friday, Oct 19, 2012
Businesses in Asia more likely to be hit by fraud: Survey

SINGAPORE - If you are doing business in Asia, there is a higher chance you will be a victim of fraud than anywhere else in the world.

Within Asia, your antennae should be up especially if you are operating in India, China or Indonesia.

The 2012/2013 Kroll Advisory Solutions' Global Fraud Report released yesterday said fraud in the Asia-Pacific region - in the form of information theft, corruption and intellectual property (IP) theft, for example - is above the global average.

India had Asia's highest number of companies - 68 per cent - hit by fraud in the past year; China and Indonesia, the two next-highest, each clocked in at 65 per cent.

The global average was 61 per cent.

Kroll's senior managing director for Asia, Tadashi Kageyama, said that ground-level experience indicates that the major developing economies in the Asia-Pacific "are as corrupt and fraud-prone as ever", but businesses in the region seem to be becoming complacent about the serious fraud risks they face.

"Companies must continue to implement practices and campaigns to actively combat fraud and corruption, which can truly cripple businesses which aren't prepared for the potential fallout from fraud," he said.

The study, commissioned by Kroll Advisory Solutions with the Economist Intelligence Unit, surveyed more than 800 senior executives worldwide.

Globally, more than six in 10 companies reported being hit by fraud last year.

Information theft remains one of its most widespread forms, affecting 21 per cent of companies this year, compared with 23 per cent in the last survey. It fell much less than other forms of fraud, which points to it being a more intractable problem.

India, second in the world only to Africa, experiences 1.2 per cent of average revenue loss to fraud.

Despite a "broad recognition" of the risk of fraud among the Indian participants in the survey, Indian companies emerged less likely than average to invest in anti-fraud strategies. Only four in 10 companies have planned to invest in IT security as protection against information theft, for example.

Moreover, in 22 per cent of Indian firms, internal controls were weakened, frequently as a result of budget constraints; this was one of the highest figures of any country or region in the survey. Complacency in guarding against fraud has surfaced in China as well.

This is evident from the fact that although 19 per cent of companies reported losses to corruption in this and last year's surveys, only 19 per cent of them believe themselves to be moderately or highly vulnerable to this type of fraud. Last year, 64 per cent did.

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