Insights & Reports > Kroll Global Fraud Report

North America continues to show the lowest number of frauds among regions in the survey, with only 80% of companies having suffered at least one fraud. However, specific categories of fraud saw significant increases over the past year.

• For seven out of ten categories of fraud in the survey, the percentage of respondents who experienced fraud in the last three years was up on the 2008 findings. In several cases, these increases were substantial: the number reporting internal financial fraud rose from 10% to 15%, and that for financial mismanagement increased from 16% to 23%.

The region is also no longer the clear low fraud- leader. In last year’s survey, it had the lowest incidence for eight out of the ten frauds; this time around it has that distinction for only three – theft of physical assets (33%), corruption (13%), and vendor fraud (11%).

• In the current survey, North America reported the largest proportion of companies experiencing more fraud due to the financial crisis than in any other region (32%).
• In addition to the three types of frauds where North America fared better than other parts of the world, the region also experienced the second lowest incidence in four other categories: information theft (23%), management conflict of interest (22%), regulatory breaches (18%), and internal financial fraud (15%).
• The number of companies suffering at least one fraud, 80%, was also the lowest globally.
• Most important, the average cost of fraud to regional companies, although still above the survey average, was $12.0 million, down from $15.1 million last year.

Concern about fraud, on the other hand, has unmistakably risen.

• The proportion of companies that consider themselves highly vulnerable to nine out of ten frauds in the survey has either risen – in seven categories – or stayed the same compared to the 2008 results. The only exception is IP theft, where the figure declined from 17% to 14%.
• For three of these frauds, more North American companies consider themselves highly exposed than in any other part of the world: regulatory breach (17%), management conflict of interest (16%), and money laundering (6%). This is even though the incidence in North America is low compared to elsewhere for these three areas
• 84% of companies reported that their exposure to fraud had increased – the highest survey figure.

This concern is not, however, translating into more widespread investment in fraud prevention.

• Perhaps because of its relatively low rates of fraud, the proportion of North American companies that have adopted nine of the ten anti-fraud strategies in the survey is below average, and in six cases they are less widespread than anywhere else.
• The exception in both cases is staff background screening, which 52% of North American firms use, the highest in the survey.

Overall, in North America, fraud has not become the problem it is elsewhere and investment in fraud prevention strategies has yet to match the level of concern.

Spotlight on Canada

Because of the large preponderance of United States respondents in the North American sample, the figures for that country and the region differ very little. Canada, on the other hand, has some distinctive features. This year, the overall incidence of specific frauds, and also their relative growth or decline since the previous survey, roughly tracked that of the region as a whole. On the other hand, Canadians are less worried. For every fraud but money laundering – where the difference is slight – fewer Canadian companies than American ones say they are highly vulnerable. For financial mismanagement, this is particularly stark (4% of Canadians compared to 15% of respondents from the United States), even though incidence of the fraud itself was higher last year in Canada (25% compared to the US figure of 22%). Canadians are accordingly less likely to invest in antifraud strategies than their neighbors, with 18% planning no such spending next year, compared with 9% in the United States.