Financial crime continues to be a major problem for businesses worldwide, according to PwC. 46% of companies say they have been a victim of some form of financial fraud in the last 24 months. This percentage, however, is declining, having risen to 47% in 2020 and 49% in 2018.

These are the results of PwC 's biennial Global Economic Crime & Fraud Survey 2022. The survey notes that "prevention and response measures seem to be working. Overall, corruption and financial crime rates have not shown an increase since 2018, despite economic uncertainty, environmental and geopolitical instability, serious supply chain issues, talent shortages and other emerging risks." This year's survey was conducted with the participation of 1,296 executives from 53 countries around the world.

Although incidents of financial crime and fraud are decreasing, they still persist in the business environment. They thus complicate daily corporate life with their impact being significant between large and small organisations.

According to PwC research, 52% of companies with global annual revenues of more than 10 billion dollars faced financial fraud in the last 24 months. Almost one in five of these businesses reported that the most serious related incident had been the50 million in financial impact. Dollars.

In smaller enterprises, the corresponding incidents of financial crime and fraud were less frequent. Once 38% of companies with revenues of up to EUR 100 million Dollars stated that he was a victim of such incidents. Of these for one in four firms the economic impact exceeded EUR 1 million dollars.

The biggest threats according to PwC

As PwC's research finds, the biggest risks to companies of all sizes are cybercrime. This is followed by customer fraud and asset misappropriation. The survey's findings for 2022 coincide with those of the previous 2020 report.

The proportion of organisations that have experienced incidents of misinformation fraud in the last 24 months was a not insignificant 15%, according to PwC. This highlights the fact that companies need to increase their preparedness against this emerging risk. The biggest threats of financial crime differ depending on the sector in which businesses operate. For example, for energy, utilities and infrastructurecompanies, cybercrime is considered a lesser threat. In contrast, fraud related to supplies is ranked as the number one risk. Of the 31% of companies in these sectors that have been victims of financial crime, almost half reported commission-related fraud against them.

«With a smaller digital footprint and fewer interactions with customers, compared to other sectors, it is reasonable the fraud profile of these sectors is different from that of other sectors. However, recent events have shown that cyber attacks against infrastructure could be an emerging threat in the near future", the study comments.

The platform scam

A new, growing risk for businesses, based on the survey findings, is so-called "platform fraud". It is now taken for granted that the average business has now integrated at least four platforms into its daily operations. This form of online fraud is considered extremely dangerous.

Financial fraudsters have been quick to take advantage of the increase in the use of platforms by exposing any cracks in their perimeter. It is no coincidence that 40% of all cases of fraud against businesses have been carried out via a platform.

"The data has changed and the perimeter of the business is vulnerable. Modern environmental, geopolitical, economic and social pressures are creating a highly volatile landscape of increased risk. Dangerous new rogues, who cannot be easily controlled or contained, are emerging rapidly. They are acting with power and efficiency. At the same time, individual criminals are grouping together in organised groups with the common goal of infiltrating digital platforms. Inevitably, therefore, organisations are now required both to be constantly vigilant in dealing with these coordinated attacks and to adopt new, sophisticated technological measures to prevent and deter them." This is noted by George Kollidas, Advisory Partner, Technology Leader at PwC Greece.

The external threats

One notable difference compared to the past is the a clear increase in the number of fraud cases caused by exogenous factors. According to the survey findings, almost 70% of the organisations that were victims of financial crime reported that the most serious incidents came from external attacks or collusion between external and internal sources. This finding is extremely dangerous. Outside fraudsters have developed immunity to traditional methods of attack prevention such as codes of conduct, training and surveys.

The dynamics of cybercriminals and organised criminal networks, which are the usual perpetrators, have increased significantly in the last two years. About the a third of external perpetrator cases were the result of hacking. While 28% came from organised crime rings. Both figures show an increase compared to the 2020 survey. "The increased frequency of data breaches in recent years will undoubtedly continue. This significantly raises the bar for companies that are required to protect the personal data of their customers," the survey says.

The footprint of the pandemic

The pandemic has left its own imprint on the forms of economic crime that businesses now face. For example, asset misappropriation, while still a top category of fraud, has fallen over the last 24 months. Most likely due to the increase in telecommuting and limited employee access to company assets.

However, teleworking has increased risks beyond digital security. For example, some companies have faced incidents of extortion or physical harm against employees, with access to valuable company data, who were working from home.

Mitigation measures says PwC

Protecting against attacks related to financial crime is extremely demanding and difficult. Businesses around the world are working hard to enhance technical capabilities, adopt stronger policies and implement stronger internal controls and reporting measures as a means of preventing financial crime. According to the survey findings, two-thirds of organisations faced with some form of financial fraud identified their most damaging incident through internal audits, an increase of 7 points compared to 2020.

In a highly volatile environment, therefore, a comprehensive understanding of the products and services provided - including any weaknesses that could potentially act as an entry point for unauthorised persons-and the implementation of fraud indicators and alerts is crucial to protect the corporate perimeter, as all the evidence points to the conclusion that financial crime is rapidly evolving and his people constantly acquire new skills in identifying the cracks they can exploit.