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The Next Man-Made Disaster

IS YOUR BUSINESS READY for THE NEXT MAN-MADE DISASTER? * il. Top Business Risks of 2014 Top 5 Risks according to directors and executives around the globe %24 Regulatory changes and heightened regulatory scrutiny Economic conditions in markets Political leadership, particularly uncertainty in leadership Ability to attract and retain top talent Organic growth through customer acquisition Top Man-Made Risks according to corporate insurance experts worldwide Business interruption and supply chain losses 43% Changes in legislation and regulation 21% Market stagnation or decline 19% Loss of reputation or brand value 15% Y Intensified competition 14% Cybercrime, IT failure 12% Theft, fraud, corruption 10% Quality deficiencies, serial defects 10% Top Industries at Risk % in each industry who have been economic crime victims 49% 49% 48% 41% 41% Financial services Retail Communications Hospitality & leisure Government/ & consumer state owned enterprises Fraud & Economic Crime of organizations in the US suffered from some type of fraud in the past two years, more than the global average of 37% North America is the 2nd most common 45% location of economic crime 54% of US respondents report their companies experienced fraud in excess of $100,000 with 8% reporting fraud in excess of $5 million Most Commonly Reported Types of Fraud 69% 44% 27% 23% 19% 13% Bribery and corruption Cybercrime Accounting fraud Asset Procurement Intellectual misappropriation fraud property infringement/ data theft Detecting Fraud 53% of US organizations perform risk assessments annually or more frequently A shocking 47% 15% + 15% + 17% don't regularly perform risk assessments don't perform risk assessments at all have only performed them once don't know how frequently they perform a risk assessment 16% M11%U11%M11% External tips were the top method by which serious fraud was detected followed by internal tips and suspicicion transaction reporting routine internal audits NO 86% of organizations report having a whistleblower mechanism Perpetrators of Fraud while with 50% of fraud is 44% is from external perpetrators 6% left unknown Internal fraud is most commonly committed by middle management External fraud is 54% 39% most commonly committed by agents of intermediaries followed by 31% junior staff The most frequently identified characteristics of internal fraud perpetrators: 77% 39% 24% 35% Employed between 3 to 5 years Male College educated 31 to 40 years old Consequences of Fraud of external 87% of external Businesses take civil action 35% against 52% of external perpetrators are reported to law enforcement compared to only 66% perpetrators are reported to relevant regulatory authorities vs only 21% perpetrators but only 17% of internal of internal of internal perpetrators perpetrators perpetrators of businesses report ceasing 48% their business relationship with the external perpetrator of businesses report Di 95% dismissing the internal perpetrator of fraud Motivations for Economic Crime The three motivations for economic crime in the "“fraud triangle" include opportunity, rationalization (or justification), and significnat pressure or incentive 73% of organizations thought opportunity to commit the crime contributed to compared the economic crime committed by internal perpetrators to only 15% for rationalization and 12% for incentive This suggests businesses have the ability to implement toughter internal controls and limit opportunity to significantly reduce the risk of internal fraud BOSTON UNIVERSITY DA

The Next Man-Made Disaster

shared by andrewdeen on Apr 13
It's imperative to stay up to date with man-made risks such as fraud in order to stay ahead of the curve.




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