Global professional services firm EY (Ernst & Young) recently identified four fraud and corruption trends that businesses need to be aware of for 2016. Cybersecurity was in the spotlight once again, while anti-bribery and anti-corruption measures are growing in importance across the world.
The trends from EY’s Fraud Investigation & Dispute Services (FIDS) division signal an increasing threat for businesses on any continent, and reinforce the importance of corporate fraud intelligence to safeguard your own firm. Here we introduce EY’s fraud trends and what your company needs to do to address them.
Instances of cyber breaches won’t drop as criminals are set to adopt “destructive attack techniques to drive their agenda”. Worryingly, it seems that a number of high-profile cyber-attacks in 2015, such as the data breach suffered by UK telecoms firm TalkTalk, hasn’t taught executives a lesson. A recent study by the Ponemon Institute of US firms’ cyber resilience found that 75 percent are not prepared to fight off a cyber-attack, and only 32 percent think they could recover from an attack. Executives on this side of the Atlantic should see this is a sign that they need to review their own IT security measures and think about detection and prevention before they get hit.
EY highlights the importance of focusing on the individual when combatting fraud and corruption, but not just singling out the criminals. Firms need to hold everyone involved accountable when corporate wrongdoing is uncovered if they are to deter future breaches. Protecting and motivating whistleblowers is equally important as they are key to identifying examples of fraud and corruption from within the business. Firms need a simple and anonymous procedure that staff can follow if they want to report fraud to their relevant superiors.
In late 2015 the European Court of Justice ruled that a 15 year old “safe harbour” agreement, which allowed the transfer of data on EU citizens to the US, was invalid. This means that the likes of Google and Microsoft can no longer self-certify that they are taking the necessary steps to protect this data, but must instead prove they fall in line with EU regulations. The ruling will prompt many US firms to evaluate their data governance controls, and their European counterparts would be wise to do the same. Big data applications have been adopted by many for the valuable insights they deliver, but with big data comes big responsibility. Systems need to be embedded with current security protocols to make sure that customer and supplier data doesn’t fall into the wrong hands.
While new government trade sanctions against companies, individuals and other governments aim to provide greater security, they also create a maze of compliance regulations that needs to be navigated. Your business must fully understand the risks that are posed by third parties that are often “masked by corporate structures” if it is to properly protect its interests. EY recommends building “more robust local compliance teams” and committing to “increase oversight and training”.
Understanding the threat of corporate fraud is an important first step towards protecting your company from it. An investment in corporate fraud intelligence can help you to be proactive rather than reactive, and stop an attack before it happens.
Avoiding the pitfalls of corporate fraud is becoming ever more complex, with scammers using sophisticated techniques to turn serious profits. In this eBook, we provide you with the essentials required to do just that and measures to implement to safeguard your business. We cover what the trends in modern day corporate fraud are and how you can minimise risk.