Manufacturers faring better in Internet fraud stakes, but no room for complacency

That's the top level finding of a survey among around 700 senior executives worldwide, commissioned by Kroll from the Economist Intelligence Unit. It also reveals that manufacturing companies registered a below-average loss compared to other sectors – with the financial services industry being hit hardest. Industry does appear to be taking fraud more seriously, which goes some way to explaining the decline in fraud activity, according to Richard Abbey, managing director of Kroll's Financial Investigations practice. He says more manufacturing companies deploy seven out of 10 of anti-fraud strategies compared to other sectors. Indeed the survey reveals that 80% have management controls, the highest proportion of any industry, while 81% have physical security systems and 53% have vendor due diligence programmes. Further, it also shows that 39% are investing further in due diligence – the most of any industry. "Any crime needs both a motive and an opportunity. The economic downturn has provided increased motive for fraud – perhaps turning previously honest employees to crime in light of lower financial rewards or pressure to meet financial targets," says Abbey. "However, the decline in liquidity has also reduced the opportunity for the determined fraudster. Our report highlights how motive and opportunity for committing crime have effectively cancelled one another out in the past year, but this apparent steady rate of fraud may be a false dawn," he adds. As we emerge from recession, both businesses and investors should be extra vigilant as we are likely to witness a different set of motivations, with the corporate saviour replaced, once again, by the activities of sophisticated criminals starved of opportunity in recent times, warns Abbey.