Fraud costs manufacturers average of $6.8 million in three years

It finds that almost nine out of ten (88%) manufacturing companies have suffered from corporate fraud in the past three years, and that they sense exposure increasing. But it’s not all IT-related: theft of physical assets or stock accounts for 47%; corruption and bribery 28%; financial mismanagement 26%; vendor, supplier or procurement fraud 25%; and then information theft, loss or attack 23%, with IP theft, piracy and counterfeiting also at 23%. “As our society has become more reliant on information technology, increased globalisation and greater interconnectedness, certain exposures have expanded right along with them,” comments Jules Kroll, founder of the company. “Dramatically new exposures such as ID theft, various IT crimes, and false reporting by asset managers were rarely seen 25 years ago.” The report draws on a survey by the Economist Intelligence Unit of 900 senior executives worldwide. It reveals that, in the manufacturing sector, spending on the leading anti-fraud strategies is less widespread than in other sectors, especially for IT measures (used at 59% of manufacturers against 70% overall). Management controls are also less apparent (at 54%, compared with 64% generally), as are staff screening measures (48% as opposed to 57%). Future investment in these fields also looks set to lag behind that by other sectors, says the survey. “The risks of fraud for business are greater today than in the past,” says Andres Antonius, President of Kroll’s Consulting Services Group. “Even the whiff of a fraud may sometimes be sufficient to place a company under severe scrutiny or in financial distress.”