Social Media Emerges as a Growing Risk for Canadian Businesses, According to Kroll’s Annual Global Fraud and Risk Report

Leaks of internal information cited as the most common business risk

Organizations fear the escalation of digital threats

90% of respondents are concerned that large-scale, coordinated cyber-attacks pose a serious threat to future global economic stability

Fraud risks related to cryptocurrencies are the number one risk of new technologies

Toronto – Adversarial social media activity was a relevant factor in 27% of significant incidents suffered by global businesses in the last 12 months, according to data from the latest Global Fraud and Risk Report released today by Kroll, a division of Duff and Phelps, the global leader in risk mitigation, investigations, compliance, cyber resilience, security and incident response solutions. The report found that Canadian organizations were more likely to report that they had been targeted by adversarial social media activity than the global average, with 38% of respondents citing this threat. Almost two-thirds (63%) of the global business leaders surveyed cited social media as a significant priority when developing a defense strategy for their organizations.

Kroll’s annual Global Fraud and Risk Report, with research conducted by Forrester Consulting, examines the current global risk landscape and analyses the biggest risks facing global companies and the steps being taken to prevent, detect and respond to daily threats. The report reveals that global companies now face an even wider risk landscape, as organizations seek to tackle emerging digital threats and deal with complex reputational and regulatory issues.

The most common risk, suffered by 39% of global businesses, is leaks of internal information, highlighting the growing internal threat to intellectual property, trade secrets and other confidential information. Canadian business leaders reported above-average levels of intellectual property theft, at 33% compared to 24% globally, and also expressed a higher level of skepticism about the efficacy of internal detection mechanisms. Only 58% of respondents deemed both their anti-money laundering controls and their whistleblowing functions effective in detecting incidents compared to global averages of 69% and 66% for anti-money laundering and whistleblowing functions, respectively.

Data theft and reputational damage caused by third-party relationships was next on the list of significant incidents reported by global business leaders, with 29% of respondents affected this year. 

The digital threat is compounded by emerging technologies such as cryptocurrency. Nearly all (91%) of the global business leaders surveyed are investigating or have already adopted distributed ledger technology, whilst 81% are considering or already using cryptocurrencies. More than one in three (35%) global businesses cited risk of fraud or theft as the primary concern when considering investing in such areas, followed by lack of clear regulatory oversight (29%), untested technology (19%) and potential involvement with bad actors (16%).

The report revealed that fraud-related incidents remain prevalent, with fraud from external parties affecting over a quarter (28%) of global respondents in the last 12 months. Canada is particularly vulnerable to fraud, with over one in three Canadian respondents (38%) experiencing an external fraud incident—10% higher than the global average. Fraud perpetrated by internal parties was also high at 29% (vs. 27% globally).

Today’s business environment continues to present challenges to businesses in terms of risk mitigation and reputation management. As such, 84% of businesses feel threatened by market manipulation through the spread of fake news, most commonly fueled by social media. Additionally, brand ambassadors and influencers present a new challenge for due diligence procedures; 78% of survey respondents use them to some extent, meaning businesses are having to vet not only the influencers themselves, but their wider digital networks. 

The research highlights that businesses need to ensure they have effective incident prevention and detection mechanisms in place to stay on the front foot. Four in five (80%) global businesses felt that their cyber risk detection mechanisms were effective, but when asked about future threats, most respondents (90%) are concerned that a cyber-attack could result in a global economic crisis. 

Peter McFarlane, Managing Director and leader of Kroll’s Business Intelligence and Investigations practice in Toronto, comments: “The scope and scale of business risks facing organizations in Canada and globally are rapidly changing, as indicated by the findings from this year’s report. In light of the various threats reported by Canadian respondents, from fraud to risks relating to social media, developing a business culture that promotes transparency and accountability is more important than ever. Business leaders should be thinking critically about how to enhance their risk management strategies and procedures using the latest technology and having the right people, training and corporate culture in place.”

About the Global Fraud and Risk Report
For the 2019 Global Fraud and Risk Report, Kroll commissioned Forrester Consulting to conduct an online survey of 588 senior executives who have responsibility for, or significant involvement in, determining their organizations’ risk management strategies. Survey respondents were drawn from the 13 countries and regions and 10 industries listed in the table of contents. 92% of the organizations operate in more than one country, and 55% have annual revenues of $1 billion or more. The survey was conducted in March and April 2019.

About Kroll, a division of Duff & Phelps
Kroll is the leading global provider of risk solutions. For more than 45 years, Kroll has helped clients make confident risk management decisions about people, assets, operations and security through a wide range of investigations, cyber security, due diligence and compliance, physical and operational security, and data and information management services. For more information, visit www.kroll.com.

Duff & Phelps is the global advisor that protects, restores and maximizes value for clients in the areas of valuation, corporate finance, investigations, disputes, cyber security, compliance and regulatory matters, and other governance-related issues. We work with clients across diverse sectors, mitigating risk to assets, operations and people. With Kroll, a division of Duff & Phelps since 2018, our firm has nearly 3,500 professionals in 28 countries around the world. For more information, visit www.duffandphelps.ca.

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