Most fraud is an inside job, says survey

Rates of fraud dipped slightly this year, according to a report. But, increasingly, it is being committed by folks right under your nose

By , CSO |  Security, fraud

Fraud cost organizations 2.1% of earnings in the past 12 months, which is equivalent to a week of revenues over the course of a year, according to the Kroll Annual Global Fraud Report, a recent survey that polled more than 1,200 senior executives worldwide.

The research does contain some good news, however, and found a decline in the frequency of fraud over last year. Of the executives polled, 75% suffered some kind of fraud-related loss in the last 12 months, which is down from 88% the year prior.

However, fraud remains predominantly an inside job, according to the report, and insider jobs increased this year. The 2011 figures show that 60% of frauds are committed by insiders, up from 55% last year.

[Also see: Social engineering: 4 ways criminal outsiders get inside]

"It's important to keep in mind these are only the cases in which the perpetrator is known," said Richard Plansky, Senior Managing Director in Kroll's Business Intelligence and Investigations practice. "I think it's a fair inference that the percentage is actually significantly higher when we take into account all fraud cases. From what we are seeing her over the last seven years, this exact finding is a reflection of an economy that is increasingly information based."

And that translates into more concern among executives, said Plansky. Overall, fraud concerns among executives around the globe rose approximately 15% led by information theft and corruption and bribery. Half of all companies surveyed said they are moderately to highly vulnerable to information theft, up from 38% in 2010. IT complexity is the leading cause of increasing fraud exposure, cited by 36% of respondents compared with 28% last year.

[Also see: What security can learn from the $15M Sprint Breach]

"Compared to just ten years ago, more and more the value of a company is not contained in tangible things, it's contained in the company's ideas, and those ideas tend to live on information systems in the form of digital data," said Plansky. "That's where the value of companies lives and insiders have tremendous access to that information. Here's a place where technology is truly a double-edged sword. These wonderful sophisticated IT systems make critical data easy to access for a wide-range of employees. That's the upside. But the downside is also that it makes critical data easy to access for a wide-range of employees."


Originally published on CSO |  Click here to read the original story.
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