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
London – 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, the global leader in risk mitigation, investigations, compliance, cyber resilience, security and incident response solutions. 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. The report reveals that firms now face an even wider risk landscape, as organizations seek to tackle emerging digital threats and deal with complex reputational and regulatory issues.
Kroll’s annual Global Fraud and Risk Report, with research conducted by Forrester Consulting, examines the current global risk landscape and analyzes the biggest risks facing global companies and the steps being taken to prevent, detect and respond to daily threats.
The most common risk, suffered by 39% of businesses, is leaks of internal information, highlighting the growing internal threat to intellectual property, trade secrets and other confidential information. In last year’s survey, information theft, loss or attack was the most prevalent type of fraud experienced for the first time in ten years, with 29% of respondents reporting being affected by this type of incident.
Data theft and reputational damage caused by third-party relationships was next on the list of significant incidents, with 29% of respondents affected this year. External fraud was also a significant issue, at 28%.
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 a third (35%) of 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. The UK is particularly vulnerable to fraud, with almost one in three firms (32%) experiencing an external fraud incident—4% higher than the global average. Fraud perpetrated by internal parties was also high at 27%.
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 anticipate this broad range of threats and detect them effectively before they escalate into bigger issues. Four in five (80%) 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.
Companies are increasingly using technology to enhance their risk management processes, with more than three-quarters (77%) of firms applying data analytics to detect threats facing their organization. This mirrors recent guidance from the OECD in its Analytics for Integrity report, which encourages the use of data analytics in the fight against corruption and fraud.
Tom Everett-Heath, Managing Director and Global Head of Business Intelligence and Investigations at Kroll, comments: “The risk landscape has continued to evolve over recent years. Businesses are now operating in more complex and volatile markets than ever, relying on a broader network of third parties and becoming increasingly digitized. In many cases, they’re also putting their reputations in the hands of social media influencers. It comes as no surprise that businesses are looking for better, more efficient ways to prevent and detect these increasingly varied threats, before they escalate into significant issues.”
Notes to Editors
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.
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.com.