Economic Crime: A persisting threat in Ireland

The PwC 2014 Irish Economic Crime Survey

Our bi-annual crime survey looks at looks at the main types of economic crime and how they affect businesses in Ireland and worldwide. The survey was conducted as part of the PwC 2014 Global Economic Crime Survey with over 5,000 senior business representatives in 95 countries participating in the survey, including 78 organisations in Ireland.

What did the survey say about economic crime?

A quarter (26%) of Irish businesses suffered economic crime in the last two years which is similar to levels in Ireland in 2011 (Western Europe 2014: 35%; Global 2014: 37%). Nearly one third (30%) said that the cost of fraud in Irish organisations has increased; a similar proportion (35%) said that the frequency has also increased. Among crime victims, 40% place the financial impact on their organisations at between €75,000 and €750,000. A further one in ten said the loss was more than €750,000 which is twice as many as in 2011. 20% said that they had experienced over 100 incidents of crime, up from 14% in 2011, and double the 2014 Western Europe experience.

What did the survey say about cybercrime?

The incidence of cybercrime has nearly doubled (45%) in the last two years (2014: 45%, 2011: 24%) as fraudsters increasingly turn to technology as their main crime tool. Also, respondents are more aware than ever of the risks associated with cybercrime with 62% confirming that they expect these risks to increase in the next two years (Western Europe: 53%). In terms of financial loss, just under a quarter (23%) of organisations who were the victim of cybercrime suffered a loss of between €40,000 and €75,000 while nearly a fifth (18%) said this loss was between €75,000 and €750,000. A surprising 6% said the loss was nearly €4m. Non-financial impacts included reputational damage (45%), loss of personal identifiable information (41%) and service disruption (40%).

How is economic crime uncovered?

Over a third (38%) of those impacted by economic crime said that it was uncovered by suspicious transaction reporting, up from 24% in 2011. The next most common detection method was through fraud risk management techniques (13%). According to the survey, no economic crimes were detected through a formal whistle-blowing program. While the majority (60%) confirmed having such mechanisms in place, less than half (44%) of these said they were not used in the past two years. Just 44% scored their whistleblowing mechanism as an effective tool in the prevention and detection of economic crime.

Who are the fraudsters?

Nearly two-thirds (65%) of the most serious crimes was committed by external perpetrators, the majority being customers. (Western Europe: External 50%; Internal 50%). Fraud committed by employees has fallen from 43% in 2011 to 35%. The survey highlights some change in the profile of the internal fraudster with a higher proportion of crime committed by middle management (57%) as compared to junior staff (29%). The majority are aged between 30 and 50 years having between 3 and 10 years of service.

What measures are companies taking to combat economic crime?

Irish businesses take a dim view of fraud and it leads to dismissal in 71% of cases. Police were called in to companies in nearly two thirds (62%) of cases. Organisations taking civil actions including seeking recoveries, has increased. However, nearly a third (30%) of respondents said that they had not performed a fraud risk assessment in the last two years mainly due to the perceived lack of value.

What do people expect for the future?

Respondents said that they expect more fraud in the coming years in nearly every category of crime. Over a quarter (27%) expect more cybercrime; 26% expect more theft; 17% expect more money laundering; over one in ten (13%) expect more IP infringement and a similar proportion expect more human resource and procurement fraud.

Aidan Walsh

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Aidan Walsh

Aidan Walsh is a partner in the advisory practice and leads the corporate finance practice in PwC Ireland. Aidan has led teams that have advised both public and private sector clients on significant infrastructure, financing and procurement including many public private partnerships. He has also advised clients on many substantial acquisitions and disposals of Irish businesses.

In addition to his extensive financial advisory roles, Aidan spent two years on secondment as acting Chief Executive of VHI in 1997/98. In that role, Aidan led an extensive change programme involving organisational structures, new product delivery, changed provider relationships and systems. Aidan has been working with Irish local authorities over the past ten years and has advised many of them with respect to their strategic and capital programmes. Aidan leads the local government network for PwC Ireland.

Aidan is a fellow of the Institute of Chartered Accountants in Ireland.