PwC Economic Crime Survey: The Canadian Way
When economic crime is up and detection methods are down, it’s time to shuffle a few priorities around
Last week we wrote about how cybercrime ranks as the second most reported economic crime. This was more from a US perspective. We looked at results from PwC’s Economic Crime Survey for 2016 and learned how cybercrime jumped two spots from 4th place to finish at 2nd for 2016. It sits right behind asset misappropriation.
But what does the state of economic crime look like north of the border? Not that much differently. After all we are all sharing the same world wide web. So it’s no surprise that cybercrime also sits in second place right behind asset misappropriation in Canada-Land too.
What’s worrying in the Canadian version of the survey is that economic crime is up, but detection methods are down.
Thirty seven percent of Canadian organizations have experienced economic crime in the past 24 months.
However detection that is within management’s control is down 14%.
And one if four Canadian organizations has not carried out a single fraud risk assessment in the past 24 months.
In the Canadian survey, there’s mention of the 19th Annual Global CEO Survey: Canadian Insights, where 76% of chief executives agreed that threats to their businesses were on the increase.
Yet detection is down…
It’s a puzzling trend where the findings conclude that there is too much being left to chance and not enough being done from a proactive detection and prevention standpoint.
Unresponsiveness to these types of trends will lead to big trouble.
Companies can’t afford to take a lackadaisical approach to anti-fraud routine.
Unfortunately Canadian businesses aren’t giving economic crime the attention it deserves. From asset misappropriation, cybercrime, procurement fraud, bribery & corruption and insider trading, businesses lose money. Half of the surveyed Canadian organizations reported losing less than $100,000, while another half reported losing between $100,000 and $5 million.
And the survey states it: “These types of reported losses put Canada on par with regions such as the Middle East, Eastern Europe and Latin America.”
But as far as prevention measures go, the same can be said as we stated in our previous post: Economic crime is a poor decision driven by human behaviour. So why shouldn’t the answer start with people. Your people. In your company.
This means communicating processes and policies clearly to all employees. It also means creating a culture where every employee is driven to uphold the company’s values.
Shine a light on your own risk
Many organizations are finding it a struggle to drill down into the heart of risks to learn what they are so that they can be addressed. And to make matters more difficult, investors, consumers, suppliers, and third-parties require increasing evidence of an organization’s commitment to doing the right thing.
Many crimes start with employees. So it stands to reason they can also end with employees. Therefore, companies need to start gathering important data from their employees.
The best method to do this is via an ethics reporting platform. The PwC Canadian survey cites that only 43% of Canadian companies complement their compliance and ethics programs with whistleblowing ethics hotlines. The ACFE’s Report to the Nations cites that anonymous tips are by far the most effective way to detect misconduct. So why aren’t more companies embracing ethics hotlines?
The future of economic crime in Canada is calling for change, according to Canadian’s perception. Many Canadian respondents foresee cybercrime leap frogging over asset misappropriation to take first place.
But the troubling thing is 43% of the respondents believe that government agencies don’t have the skills or know-how to investigate cybercrime.
So, perhaps it’s time to start investigating internally! Organizations need to implement strong in-house anti-fraud measures.
A third-party ethics reporting hotline, where employees can come forward anonymously to report on anything they see, is one such beneficial tool that complements an anti-fraud program.
This is one of the best methods to learn about potential incidents happening inside an organization. Employees are your first line of defence. And many organizations are benefiting from implementing such programs and promoting speak-up cultures.