India Inc. to face increasing threats from IT, IPR frauds: KPMG

• IBTimes RSS
• Print
• E-Mail
• digg
• Del.icio.us

The modern day corporate risks, which includes identity theft, stealing of intellectual property and frauds related to e-commerce and IT, are set to replace supplier kickbacks and bribery as the biggest risks that business organizations are currently facing, the 'India Fraud Survey' report, which has compiled responses of senior executives of over 1000 Indian firms, said.

"Fraud and white collar crime have increased considerably over the recent years, andthis trend is likely to continue," the report said, adding that the financial sector was most vulnerable to frauds, followed by real estate/infrastructure and IT/ITeS sectors.

"The cost of fraud to businesses is difficult to estimate because not all fraud and abuse is discovered, not all uncovered fraud is reported, and civil or criminal action is not always pursued," it added.

KPMG said the dual impact of the two concerns - unethical behavior of employees and inadequacies of anti-fraud measures - led to an environment where both inclination and opportunity coexist.

"This could mean that organizations in India that remain passive in their approach to deal with fraud may be a perfect breeding ground," it said.

According to the report, over 80 percent of the respondents recognized fraud as a big problem in the corporate environment in India, while another 70 percent believe that the menace will increase over the next two years.

A startling 60 percent of the respondents said they have encountered incidents of fraud in their companies in the last two years, as compared to 39 percent in the last survey in 2006.

Though 72 percent of the respondents said their companies carried out background checks on new recruits, more than 60 percent of the respondents said their companies did not have a complete understanding of the various risks of frauds faced by them.

While about 70 percent of the respondents said fraud risks could be controlled by conducting integrity due diligence on senior management and strategic alliance partners, yet, only 27 percent respondents admitted having used the company's internal controls framework to keep a check on or detect fraud.

• 1
• 2