Global Fraud Update

As depressing as recent economic statistics may be, new fraud findings are worse.  The fourth annual Kroll Global Fraud Report finds more than a quarter of global companies experienced some form of information theft or fraud within the last 12 months.  Information theft is higher than average in the US, despite the region’s relatively safe environment compared to emerging markets.  87% of companies in North America indicated some level of fraud had impacted them, and two-thirds of those surveyed believe their exposure to fraud has been increased in the past year.  The main reason they cite is increasingly complex technology required to do business. 

 CFOzone.com highlights that physical theft is down for 2010 worldwide, while data theft increased by 52%.  They point out that "only" 27% of companies experienced a data loss, but 80% reported some sort of attack or problems related to data management. 

 Larger companies indicated they might curtail global expansion as a way of reducing their fraud risk.  While that’s a defensible strategy, it was a shock for me to see that despite these really high growth rates in fraud activity, the amount of money these same companies are spending on fraud prevention has declined year-over-year. The response varied by industry type.  (See Kroll's graphic summary below).

I’m the first one to say that you can’t confuse correlation with causality, but this one seems like it’s obvious there’s a connection.  Information fraud can be costly to companies in terms of both the actual loss and the loss of confidence that customers develop based on the incident.  Retreat isn't the answer, even in tough economic times.  Consistent investment in fraud prevention has to be the winner every time.