Third of companies suffer supplier fraud

21 October 2013

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22 October 2013 | Will Green

Fraud has hit 70 per cent of companies in the past 12 months and the sharpest increase is in vendor or procurement scams, according to a study.

The 2013 Kroll Global Fraud Report says the number of firms hit by fraud has risen from 61 per cent in the previous year, while one in five organisations has fallen victim to procurement related fraud, up from 12 per cent.

Of those falling victim to procurement fraud, a third experienced wrongdoing perpetrated by vendors or suppliers and 12 per cent suffered at the hands of joint venture partners.

The report said globalisation had increased firms’ exposure to fraud as they “seek expansion into riskier overseas markets and use greater levels of outsourcing”.

The number of firms affected by bribery and corruption increased from 11 per cent to 14 per cent and almost half of firms refrained from expanding into a foreign market because of corruption.

Kroll said cyber crime is also on the rise, with attacks by external hackers almost doubling, while 17 per cent of firms affected by information theft suffered as a result of an attack on a vendor or supplier, up from 5 per cent.

Tom Hartley, CEO of Kroll, said: “It should come as no surprise to anyone whose job it is to combat fraud that the global incidence of fraud is rising. But the measure of a good company is not whether or not you’ve suffered a fraud, it’s how you prepare for it, how you deal with it and how you move on afterwards.”

CIPS fraud advisor Paul Guile said the full extent of fraud remained unknown but organisations needed to ensure staff were trained to spot and prevent it.

“Procurement fraud is under-recognised as a risk,” he said.

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