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Study finds 60% of frauds are committed by insiders

Junior employees were the most likely perpetrators followed by senior management

Theft cost companies 2.1% of earnings in the last 12 months

Washington CNN  — 

When it comes to business fraud, it’s more often an inside job, according to a worldwide survey of industries and executives by a risk consulting company.

This year’s study by Kroll Business Intelligence and Investigations found 60% of frauds are committed by insiders, an increase from 55% in 2010.

“Among companies that were impacted by fraud, junior employees were the most likely perpetrators at 28% followed by senior management at 21% and intermediaries for the company at 11%,” Kroll stated in its fifth annual report.

The survey found that on average, fraud such as stolen cash, assets, inventory or information theft cost companies 2.1% of earnings in the last 12 months. For the companies that lost the most revenue, the survey found “senior executives are more likely to be the perpetrators (29%) with junior employees involved in only 8% of the cases.”

“This year’s study provides a reason for both optimism and concern,” said Robert Brenner, vice president for Kroll. “Companies are paying attention and investing more in detection and prevention of fraud generally. However, they continue to lag in their attention to laws that are intended to root out bribery and corruption,” Brenner said in a statement accompanying the report.

Information technology theft continues to be a major threat to businesses. Half of all companies said they are moderately to highly vulnerable to information theft, up sharply from 38% last year.

In addition to IT theft, the survey found that high staff turnover increased a company’s exposure to fraud.

Broken down by region, North America had the lowest average fraud loss. Africa reported the highest incidence of fraud among any region, with 85% of respondents falling victim to fraud in the past year. Corruption is a major problem. Nearly 80% of companies in Africa indicated a high or moderate vulnerability to bribery and corruption.

Kroll found half of the companies surveyed were discouraged from becoming more global because of the fear of fraud.

The survey polled 10 industries including financial services, retail and wholesale, technology, consumer goods, healthcare, travel, leisure, construction and manufacturing. A total of 1,265 senior executives took part in the study. Nearly a quarter of the respondents were based in North America (23%) and Europe (24%). Slightly more (28%) were from the Asia-Pacific region, with 15% from the Middle East and Africa and 11% from Latin America.