Fredrick Obura
A recent survey by PricewaterhouseCoopers paints a picture of huge losses companies suffer due to...
both internal and external crimes.
In
Kenya for instance, 36 per cent of respondents that experienced
economic crimes lost over Sh10 million with 2 per cent losing in excess
of Sh500 million.
“In addition to the direct financial
losses, organisations are exposed to fines and penalties by regulators,
claims from affected third parties and damage to their brand and
reputation, as well as dampening of employee morale, especially
collateral victims not involved in the crimes,” according to the report
“In the past, most of the incidents
were perpetrated internally, however in most cases, there is an element
of collusion with external actors.”
In Kenya and in Africa, internal
parties were reported to have been the most common perpetrators of
economic crime unlike globally where the incidents by external
perpetrators were higher.
Who is committing these crimes?
Operations staff:
Fraud committed by
operations staff was the highest of the fraud attributed to internal
actors at 53 per cent.
It could be an indication of the ineffectiveness
of controls at lower levels or more daring attempts by junior staff.
Middle-level management was the most active group of internal actors in
2018 (decreased from 41 per cent to 28 per cent).
Kenya, however, seems to be the exception, as elsewhere, senior management were reported to have committed more fraud.
Customer fraud: Customer Fraud
continues to be rampantly topping the list of external perpetrators of
economic crimes at 43 per cent of externally perpetrated economic
crimes. Instructively, whereas Customer Fraud is the most prevalent
globally at 35 per cent, it is lower in Kenya where the prevalence rate
is 32 per cent.
Vendors and suppliers: As more
companies invite vendors and other third parties into their
organisations’ operating environments through outsourcing of various
services, they expose themselves to risks from parties seeking to
illicitly enrich themselves at their expense.
With 34 per cent of economic crimes
attributed to these third parties, this paints a scary picture as to the
level of trust needed and risks organisations face in the business
environments they are forced to operate in.
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