While more companies now fear of increased threat from online platforms, very few of them have actually spent to avoid such threats.
The coronavirus pandemic has dramatically led to a rise in remote working culture; however, the new culture has made companies more prone to cybercrimes and various other frauds as well. While more companies now fear of increased threat from online platforms, very few of them have actually spent to avoid such threats. Nearly 80 per cent of India Inc foresees an increase in fraud cases in the next two years, but less than 5 per cent of them invested in anti-fraud technologies in the past six months, according to a survey conducted by Deloitte Touche Tohmatsu India LLP ((DTTILLP).
Cybercrimes are likely to dominate fraud schemes due to large-scale remote working arrangements and a change in business models. Further, the risk of bribery and corruption, and vendor/business partner favouritism is high, said the India Corporate Fraud Perception Survey by DTTILLP. While the trust in third parties is deteriorating, with 36 per cent of respondents saying they were most likely to perpetrate fraud, around 43 per cent of respondents feel existing fraud risk management frameworks are inadequate to address future frauds.
Altogether, compared to the 2018 standards, there is a significant 22 percentage points increase in the perception that such frauds will increase in the next two years. Some companies also fear that the frauds will hit their revenue by up to 5 per cent.
“Traditionally, many Indian organisations have directed a majority of their Fraud Risk Management (FRM) efforts towards fraud detection, whereas technology interventions can be primarily geared towards fraud prevention,” said Nikhil Bedi, Partner, and Leader, Forensic, Financial Advisory, DTTILLP. This will require a shift in mindset from fraud detection to fraud prevention, Bedi added.
Meanwhile, the survey also outlined the evolution of the fraud risk management ecosystem comprising third-party experts, such as law firms, forensic accountants, technology companies, and others. The effectiveness of fraud risk management efforts in the future will rely on building a trustworthy ecosystem of experts while in-house fraud risk management teams will continue to grow and manage known risks, Bedi further said.