Although the general business sentiment remains positive, the threat of fraud, bribery and corruption looms large for India. A PwC survey reveals that more than one in every four organisations in the country are impacted by economic crime—a finding that reflects the pervasiveness of the problem. The fact is 31% of Indian respondents experienced economic crime in the last 2 years; 27% organisations in India have been asked to pay a bribe in the last 24 months as compared to 13% globally and 56% organisations in India have increased spend on compliance programmes and resources
Economic crimes continues to remain a serious concern in India with more than one in every four organisations getting impacted by such instances; this reflects the pervasiveness of the problemin the country. Almost 61% of economic crimes in India are committed by employees within an organisation.
In 43%of the cases, a middle level employee is the main perpetrator of the crime as against 35% globally. According to the just released PwC’s Global Economic Crime Survey 2016 – An India Perspective, 61% of themare in the 31-40 age group, significantly higher than the global average of 42%.
The survey, considered amongst the most comprehensive studies of economic crime in the business world, has put into focus the impact of evolving regulatory requirements and technology on economic crime. It has also re-emphasised the increasing difficulties of predicting and detecting such instances.
Twenty one per cent of organisations have not conducted a fraud risk assessment in the last 24 months while 20 per cent do not know about it. Only 5 per cent conduct one every six months while 26 per cent conduct it annually.
Says Dinesh Anand, Partner and Leader, Forensic Services, PwC India, “Organisations can no longer afford to be in a reactive mode when it comes to economic crimes. Companies need to adapt their risk assessments and control frameworks fast enough to prevent such crimes. It is encouraging to see an increasing aspiration among Indian businesses to move beyond statutory compliance and into the domain of self-regulation. Many companies no longer want compliance to be just a 'tick in the box' exercise and are investing more and more incomprehensive compliance and monitoring programmes.”
“The true cost of economic crime to the Indian economy is difficult to estimate, especially considering that actual financial loss is often only a small component of the fallout from a serious incident. The reputation cost of such crimes is often much higher,” Anand added.
According to the survey, asset misappropriation was the most common type of economic crime in India over the last 24 months, followed by procurement fraud and bribery and corruption.
At a time when the scope, scale and sophistication of cyber risks faced by companies continue to rise, what is needed to combat this growing threat is not a digital strategy but a business strategy for the digital age—one more focussed on managing risks than on remediating incidents. For forward thinking organisations, this is also where the opportunity lies.
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- 31% of Indian respondents have experienced economic crime in the last 2 years
- 27% organisations in India have been asked to pay a bribe in the last 24 months as compared to 13% globally. However, 58% respondents strongly agree that they would rather allow a business transaction to fail than pay a bribe
- 56% organisations in India have increased spend on compliance programmes and resources
- Profile of a fraudster: a highly educated/educated male between 31–40 years at a junior to middle level in the organisation.
- 56% of the Indian respondents perceived an increased risk of cyber crime over the past two years, as compared to 53% globally.
- 16% of the organisations experienced cybercrime in the past two years.
- Only 45% of the organisations have fully trained cyber crime first responders.
- 88% of the responding organisations in India have a formal business ethics and compliance programme.
- 56% of the responding organisations witnessed an increase in their spend on compliance programmes and resources.
- 94% of the Indian respondents stated that their organisations had a clear code of conduct.
- However, 15% indicated their leaders did not walk the talk, 24% mentioned unclear communication and training and 19% feared retaliation for reporting a violation.
Organisations can no longer afford to be in a reactive mode when it comes to economic crimes. Companies need to adapt their risk assessments and control frameworks fast enough to prevent such crimes. It is encouraging to see an increasing aspiration among Indian businesses to move beyond statutory compliance and into the domain of self-regulation. Many companies no longer want compliance to be just a 'tick in the box' exercise and are investing more and more incomprehensive compliance and monitoring programmes
- DINESH ANAND, PARTNER & LEADER, FORENSIC SERVICES, PWC INDIA