PwC has released the Belgian results of its Global Economic Crime and Fraud Survey 2018, “Pulling fraud out of the shadows”. The survey gathered data from over 6,300 participants, of which 62 were Belgian respondents. Some key highlights from Belgium show that:
- 65% of respondents in Belgium experienced economic crime in the last 2 years, compared to 45% in 2016
- 30% estimate the financial impact to be between $100,000 and $1,000,000
- 27% of economic crime is perpetrated by internal actors
- 66% of cybercrime is the result of phishing
The results underline the greater awareness and understanding of the types of fraud, perpetrators, the role of technology, and fraud’s potential impacts and costs for a business. “We can’t equate higher levels of reported crime with higher levels of actual crime,” comments Rudy Hoskens, Forensics leader and Partner, PwC Belgium. “What the survey is showing us is that there is far more understanding of what fraud is and where it is taking place. It’s particularly true of cybercrime, where there’s a much greater understanding of the issues, investigations, analysis, and greater investment in controls and prevention.”
Economic crime remains a persistent threat
The most prevalent type of economic crime in Belgium is cybercrime (53%), which is in second place globally (31%), behind asset misappropriation (45%). Asset misappropriation finds itself in second place in Belgium, reportedly experienced by 30% of respondents. In third place both globally and in Belgium is fraud committed by the consumer, the first time that survey respondents had the opportunity to include this type of economic crime as an answer. “A sizable percentage of the ‘external’ perpetrators (and 70% of cases are external for our Belgian respondents) is made up of third parties with whom companies have regular relationships: agents, vendors, shared service providers, customers and more. In other words, people and entities with whom one would expect a certain degree of mutual trust, may actually be stealing from the company,” explains Hoskens. “Everyone in the business must be vigilant about who is allows to access its systems and processes. While technology has a strong role to play in monitoring and detection, when it comes to blocking fraud, the returns from people initiatives are likely to far exceed those from investing in another piece of technology.”
How are Belgian firms being attacked?
While cybercrime and asset misappropriation remain the top two types of economic crime experienced in Belgium, rates for these crimes decreased compared to results of our 2016 Global Economic Crime and Fraud Survey. Indeed, almost all types of economic crime were seen less over the last two years, than the two years prior. Accounting fraud however increased in Belgium, from eight percent in our 2016 survey results to 10% in 2018. Globally, accounting fraud increased from 18% to 20% this year.
- Cybercrime: 53% (2016:65%)
- Asset misappropriation: 30% (2016: 50%)
- Fraud committed by the consumer: 28%
- Procurement fraud: 18%. (2016: 19%)
- Business conduct/misconduct: 13%
- Bribery and corruption: 10% (2016: 15%)
- Accounting fraud: 10% (2016: 8%)
Detecting and combating economic crime
Our survey shows that corporate controls are the largest contributor to detection, with 47% of respondents in Belgium (52% globally) indicating that the most disruptive fraud was initially detected by this method. However, a large part of economic crime (Belgium: 26%; globally: 27%) is also detected through tip-offs or hotlines - a trend that’s likely to continue to grow, given increased attention for whistle-blowing hotlines.
Almost half (47%) of companies in Belgium increased their financial commitment to combating economic crime in the past two years (42% globally). However, despite a jump in fraud and the increasing pervasiveness of technology, more than half of Belgian (and global) respondents don’t plan to increase spending over the coming two years. “Despite higher levels of understanding and reporting of fraud, blind spots still prevail,” states Hoskens. “The number of companies not performing general fraud risk assessments remains high, with 49% of Belgian respondents indicating they have not performed a general fraud risk assessment in the last 24 months – and 46% at global level.”
Cybercrime: Belgium’s number one threat
Cybercrime is the most common economic crime in Belgium, experienced by 53% of respondents. Importantly, almost two-thirds (62%) of Belgian respondents believe that cybercrime will continue to be the most disruptive economic crime in the next 24 months, ‘outperforming’ other types of crime. The most common techniques used by cybercriminals are phishing (66%), malware (56%) and network scanning (16%).
The greatest impact of cybercrime was disruption to business processes (31%), closely followed by asset misappropriation (28%). Just two percent of respondents reported intellectual property theft. Worryingly, 20% of Belgian respondents indicated that they don’t know what the exact consequences are, which is alarming because there might have been data loss or IP theft.
Also of concern is that although 66% of Belgian respondents worked on cybersecurity programmes over the last 24 months and such programmes were installed by 55% of respondents (up from 37% in 2016), only 35% indicated they carried out an assessment of their plan.
“Fraud is the product of a complex mix of conditions and motivations, only some of which can be tackled by machines and technology,” comments Hoskens. “The funds allocated to crime detection and prevention – in terms of both technology and corporate cultural – are increasing, and that has a multiplier effect in terms of understanding and detection of fraud. And the public’s tolerance for corporate and personal misbehaviour continues to decline. To put it simply, the impact of fraud is no longer an acceptable cost of business.”