Opportunistic fraud: a growing concern | KPMG | TT

Opportunistic fraud: a growing concern

Opportunistic fraud: a growing concern

Weak internal controls were a significant factor in 61% of the investigated fraud cases, and the problem appears to be growing. The number of fraudsters who were able to commit their crimes by taking advantage of weak controls in their organization rose to 27%, a notable increase from 18% in 2013.

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Even if strong controls are in place, fraudsters can and do evade or ignore them. Fraudsters who colluded with other persons were able to circumvent strong controls in 16% of the cases, and an additional 20% recklessly perpetrated fraud with no regard for the controls.

The new face of fraud

Is there a clear profile of typical fraudsters? "They are predominantly autocratic males aged 36 to 55 who have established a strong position of power and are highly regarded within the organization," says Hilde De Cremer, Director Forensic at KPMG in Belgium.

The main motives of typical fraudsters are personal profit (60%), greed (36%), or simply "because it's possible" (27%). In many cases fraudsters have worked for the company for at least 6 years (38%) and constitute an internal threat (65% work for the company). The companies concerned lost 5% of their income to fraud.

Technology: a two-edged sword

Technology was an important tool for a quarter (24%) of the fraudsters investigated by forensic specialists. "Technology is a sword that cuts both ways, and with fraud it will only get sharper," explains Hilde De Cremer. 

Fraudsters use technology in a variety of ways to perpetrate fraud: they provide false or misleading information to accounting (24%), send false or misleading information by email or another messaging platform (20%), or abuse their access to computer systems (13%).

"Continuous advancements in technology enable fraudsters to devise increasingly clever ways to achieve their fraudulent objectives. And while fraudsters are only too keen to take advantage of technology to perpetrate fraud, we see little evidence that companies are using technology to prevent fraud. Data analysis and threat monitoring systems are indispensable for combatting fraud because they can quickly detect abnormal or suspicious behavior." The report shows that only 3% of fraudsters are caught by proactive analysis. 

Global fraudster profiles

Fraud is a global scourge that can break companies' reputations, cause losses and damage to the tune of millions of euros, and even ruin lives. It is a heavy economic and moral burden on society. But how can companies combat fraud, and above all, who are the fraudsters? With a new worldwide study (Global profiles of the fraudster) of 750 fraudsters in 78 countries, KPMG is attempting to unmask typical fraudsters. 

 

© 2017 KPMG Central Services, a Belgian Economic Interest Grouping ("ESV/GIE") and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

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