Businesses need to see the danger of financial crime as a significant risk as cyber threats increase and the incidence of fraud grows.
All indications point to an increase in financial crime and fraud being committed, detected and combatted in Ireland. However, the latest Irish Economic Crime Survey conducted by PwC suggests than in spite of sentiment to the contrary, Ireland is a target for cyber crime in all its forms.
The full extent to which economic crime is plaguing Irish business is astonishing, especially when compared to our global counterparts. Half of Irish companies report that they have been victims of financial crime. Cyber crime is now top among the list of business threats. The increase in economic crime in Ireland is happening faster than anywhere else in the world.
What can companies do to fight fraud with both eyes open and ensure that financial crime is made visible, while also illuminating blind spots that can prevent them from seeing the big picture?
The rate of fraud is continuing to rise, along with the cost of addressing it
Half of all companies in Ireland have been victims of economic crime or fraud in the last two years. In that time, Irish businesses have lost an average of €3.1m to the most disruptive financial crimes. This is an increase from €1.7m in 2016 and €498k in 2014.
And 69% of businesses spent the same amount or more on the clean-up after the incident than they lost from the crime or fraud itself.
Though many organisations still feel that Ireland is not a target for financial crime, the facts tell another story. The rate of reported economic crime in Ireland has risen from 34% to 49% in the last two years, in line with trends seen globally.
Irish companies are spending more than their global counterparts to combat economic crime and fraud
Not only is reported economic crime and fraud up since 2016, so too is the amount that companies are spending to fight it. Half of Irish respondents said that their organisation has increased spending on combating financial crime and fraud over the past two years and two-thirds expect that to increase in the years ahead.
Given that only 44% of global companies expect to increase their spending, it is arguable that Irish businesses are recognising that they are at higher risk.
Alarmingly, the amount of economic crime committed by external parties has leapt from 50% in 2016 to 67% in 2018. This is in stark comparison to only 40% of externally committed financial crime globally.
Irish organisations have experienced twice the number of phishing and malware attacks than global companies
Today’s cyber criminals are as savvy and professional as the businesses they attack. This maturity calls for a new perspective on the multifaceted nature of cyber crime threats like phishing and malware.
The increasing frequency and sophistication of these attacks are spurring companies to look for more effective ways to mitigate them. These measures include technology-enabled techniques to pre-empt where the next attack will come from.
In order to tackle the increasing rate of digital attacks, three-quarters of businesses operate cybersecurity programs, compared to 59% globally. This is encouraging, showing Irish businesses are investing in designing a deliberate strategy to curb cyber crime.
Irish companies lag their behind global counterparts in using technology to combat economic crime and fraud
Today, organisations globally have access to a wealth of innovative and sophisticated technologies with which to defend themselves against financial crime, aimed at monitoring, analysing, learning and predicting human behaviour.
In spite of that, only 11% of Irish respondents admitted to using technology as their primary monitoring technique to detect economic crime and fraud, compared to 23% globally.
There is a big opportunity for organisations to leverage innovative and cloud-based techniques to identify suspicious patterns and pre-empt economic crime before it happens.
Accountability and responsibility come from the top
The tone from the top and the expectations set by management play a critical role in the detection and prevention of economic crime and fraud in a company. Establishing a culture of honesty and openness from the top down sets the tone for an organisation and creates a spirit of accountability.
A company’s ethics and compliance programme has a critical role in shaping an organisation’s attitude and approach to external and internal threats.
While technology is clearly a vital tool in the fight against fraud, it can only ever be part of the solution. This is because fraud is the result of a complex mix of conditions and human motivations.