Cyberattacks Occurring More Frequently, Costing Companies More
The number of businesses and other organizations falling victim to cybercrime and other forms of deception is on the rise, new research shows.
According to the 2011 Global Economic Crime Survey released by PwC, nearly half of all surveyed businesses reported suffering some form of fraud in the past year, up 10 percentage points since 2009.
The security breaches haven't been cheapfor businesses, either.
The number of businesses reporting frauds that cost them more than $100,000 increased substantially, to 54 percent, with 10 percent reporting fraud had cost their organization more than $5 million.
"The costs associated with economic crime pose a serious threat to an organization's bottom line," said Chris Barbee, leader of PwC's global forensic services practice. "Companies must consider the potential damage to reputation and brand, along with the very real possibility that corrupt activity perpetrated by their employees or by affiliates, third parties, intermediaries and joint venture partners could trigger stiff penalties."
Cybercrime has increased considerably in recent years. Forty percent of the surveyed companies said they have been affected, making it the second-most common fraud.
Additionally, high-profile hacking casesat places like Sony and Citigroup are making other companies take note. More than 60 percent of U.S executives surveyed indicated that their perceived risk of cybercrime increased over the last 12 months.
Yet 33 percent of surveyed companies said their company's top brass never reviewed cybercrime risks, or reviewed them only in specific instances. Fifteen percent said such risks were reviewed only once a year.
Didier Lavion, principal in PwC's forensic services practice, said it's clear many executives have yet to seize upon the serious nature of cybercrimes.
"Cybercrime has emerged as a formidable threat, thanks to deeply determined, highly skilled and well-organized cybercriminals, from nation states to hacktivists, from criminal gangs to lone-wolf perpetrators," Lavion said. "Organizations need to be aware, and adjust to this changing landscape."
Asset misappropriation remains the most common fraud globally and in the U.S., with 93 percent of those surveyed having experienced it in the past year.
It's also one of the hardest frauds to prevent, Didier said
"It can be compared to a leaky faucet: what seems like a trickle of water amounts to gallons over time," Didier said. "Consider that every dollar lost in fraud is a dollar in profit that requires multiples in revenue to recoup."
The survey also identified crimes that are on the decline.
Only 16 percent of companies reported cases of accounting, down 8 percentage points since 2009.
In addition, reported incidents of bribery and corruption within the U.S. dropped significantly, from 16 percent in 2009 to 7 percent this year.
The study was based on surveys of more than 3,800 employees from companies in 72 countries around the world.