Global Fraud and Risk Report 2019/20 – Manufacturing Overview

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The results of our survey highlight many risks to which the manufacturing industry is particularly susceptible. A natural repository of intellectual property, manufacturing is significantly more likely than other industries to have experienced IP theft (43 percent vs. 24 percent for all industries); it also matches the extractives sector in experiencing the highest incidence of leaks of internal information (46 percent vs. 39 percent for all industries).

In addition, the industry reports significant reputational damage due to thirdparty relationships at a substantially higher rate than average (35 percent vs. 29 percent for all industries)—a clear illustration of how reputational problems can move along a supply chain. Consequently, manufacturing companies would do well to mandate reputational due diligence for suppliers, especially given the industry’s current below-average rate for such examinations (89 percent vs. 92 percent for all industries).

Manufacturing | Kroll Global Fraud and Risk Report | | Industry Overview | 2019

Manufacturing respondents are less likely than average to say they perceive a clear message from the top of their organizations that integrity, compliance and accountability are important (72 percent vs. 78 percent for all industries) and are the least likely respondents from any industry to report that their companies respond to risk management incidents in consistent ways (65 percent vs. 75 percent overall).

While disruptions due to sanctions, tariffs or changes in trade agreements have affected the manufacturing industry at an average rate (28 percent vs. 27 percent for all industries), geopolitical issues have nevertheless had a significant effect on the sector. Manufacturing is the industry most likely to report having been affected by newly imposed sanctions (57 percent vs. 47 percent for all industries) and by new tariffs or trade wars (69 percent vs. 54 percent for all industries). The industry as a whole does not expect geopolitical risks to abate anytime soon—in our survey, manufacturing respondents are more likely than respondents in any other industry to express concern about a potential breakdown in intergovernmental mechanisms for dispute resolution, free trade and combating corruption (69 percent vs. 61 percent for all industries).

Geopolitical risks are not the only issues anticipated by the manufacturing industry. Given the immense effects that robotics and other technologies have had on manufacturing, naturally this sector is more concerned than any other about disruptions due to artificial intelligence (67 percent vs. 56 percent for all industries). Manufacturing respondents also report far more concern than those in any other industry about destabilization of fiat currency due to cryptocurrency (67 percent vs. 53 percent for all industries).

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