Dark Reading is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Attacks/Breaches

Incidence Of Cybertheft Surpasses Incidence Of Physical Theft For The First Time, Study Says

Fraud-related losses rose 20 percent to $1.7 billion in the past year, Kroll study says

Incidence of theft of information and electronic data at global companies has overtaken physical theft for the first time, according to a study released yesterday.

According to the latest edition of the Kroll Annual Global Fraud Report, the amount lost by businesses to fraud rose from $1.4 million to $1.7 million per $1 billion of sales in the past 12 months -- an increase of more than 20 percent.

The findings are the result of a study commissioned by Kroll and conducted by the Economist Intelligence Unit, which surveyed more than 800 senior executives worldwide.

While physical theft of cash, assets, and inventory has been the most widespread fraud by a considerable margin in previous Global Fraud Reports, this year's findings reveal that theft of information or assets was reported by 27.3 percent of companies during the past 12 months -- up from 18 percent in 2009. In contrast, reported incidences of theft of physical assets or stock declined slightly, from 28 percent in 2009 to 27.2 percent in 2010.

According to the 2010 survey, 88 percent of companies said they had been the victim of at least one type of fraud during the past year. Of the specific countries analyzed, China is the top market in which companies suffered fraud -- 98 percent of businesses operating there said they have been affected. Colombia ranked second with a 94 percent incidence of fraud in 2010, followed by Brazil with 90 percent.

"Theft of confidential information is on the rise because data is increasingly portable, and perpetrators -- often departing or disgruntled employees -- can remove it with ease absent sufficient controls," says Robert Brenner, vice president of Kroll's Americas region. "At the same time, there is a growing awareness among thieves of the increasing intrinsic value of an organization's intellectual property.

"The results of the survey do not suggest that other types of fraud are decreasing, but merely that the rise in theft of intellectual capital has outstripped other fraudulent activity that has remained constant. Companies need to regularly evaluate how they are controlling access to information."

Information-based industries reported the highest incidence of theft of information and electronic data during the past 12 months, according to the study. These include financial services (42 percent in 2010 vs. 24 percent in 2009), professional services (40 percent in 2010 vs. 27 percent in 2009), and technology, media and telecom (37 percent in 2010 vs. 29 percent in 2009).

The speed of technological developments poses new challenges in the fight against fraud, according to survey respondents. Nearly one-third (28 percent) of respondents cited information infrastructure complexity as the single most important factor in raising their exposure to fraud. However, despite the increased risks, only 48 percent of companies are planning to spend more on information security in the next 12 months, down from 51 percent last year.

Fear of fraud dissuades nearly half of the companies surveyed from becoming more global, according to the study. Forty-eight percent of respondents indicated that fraud had dissuaded them from pursuing business opportunities in at least one foreign country. The biggest impact has been on emerging economies, with fraud deterring 11 percent of businesses operating in China, 11 percent in Africa, and 10 percent in Latin America. Respondents said they managed risk in these countries simply by avoiding the regions, even though they might offer attractive investment opportunities.

Increased regulation through the Foreign Corrupt Practices Act (FCPA) and the introduction of the U.K.'s new Bribery Act has created new challenges for companies, the study said. According to the survey, nearly two-thirds (63 percent) of businesses with operations in the U.S. or U.K. believe the laws do not apply to them or are unsure.

As a result, many companies are unprepared to deal with the regulatory risks of fraud: Less than half (47 percent) are confident they have the controls in place to prevent bribery at all levels of the operation, compared with 42 percent who said they have assessed the risks and put in place the necessary monitoring and reporting procedures, according to the study. For those companies that have been affected by fraud during the past year, junior employees and senior management were the most likely perpetrators at 22 percent each, followed by agents or other intermediaries at 11 percent, according to Kroll. The proportion of fraud carried out by these employees ranged from 50 percent to 60 percent in North America, Europe, and Asia-Pacific to 71 percent in the Middle East and Africa.

Have a comment on this story? Please click "Discuss" below. If you'd like to contact Dark Reading's editors directly, send us a message. Tim Wilson is Editor in Chief and co-founder of Dark Reading.com, UBM Tech's online community for information security professionals. He is responsible for managing the site, assigning and editing content, and writing breaking news stories. Wilson has been recognized as one ... View Full Bio

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
AI Is Everywhere, but Don't Ignore the Basics
Howie Xu, Vice President of AI and Machine Learning at Zscaler,  9/10/2019
Fed Kaspersky Ban Made Permanent by New Rules
Dark Reading Staff 9/11/2019
Register for Dark Reading Newsletters
White Papers
Video
Cartoon Contest
Current Issue
7 Threats & Disruptive Forces Changing the Face of Cybersecurity
This Dark Reading Tech Digest gives an in-depth look at the biggest emerging threats and disruptive forces that are changing the face of cybersecurity today.
Flash Poll
The State of IT Operations and Cybersecurity Operations
The State of IT Operations and Cybersecurity Operations
Your enterprise's cyber risk may depend upon the relationship between the IT team and the security team. Heres some insight on what's working and what isn't in the data center.
Twitter Feed
Dark Reading - Bug Report
Bug Report
Enterprise Vulnerabilities
From DHS/US-CERT's National Vulnerability Database
CVE-2019-4147
PUBLISHED: 2019-09-16
IBM Sterling File Gateway 2.2.0.0 through 6.0.1.0 is vulnerable to SQL injection. A remote attacker could send specially-crafted SQL statements, which could allow the attacker to view, add, modify or delete information in the back-end database. IBM X-Force ID: 158413.
CVE-2019-5481
PUBLISHED: 2019-09-16
Double-free vulnerability in the FTP-kerberos code in cURL 7.52.0 to 7.65.3.
CVE-2019-5482
PUBLISHED: 2019-09-16
Heap buffer overflow in the TFTP protocol handler in cURL 7.19.4 to 7.65.3.
CVE-2019-15741
PUBLISHED: 2019-09-16
An issue was discovered in GitLab Omnibus 7.4 through 12.2.1. An unsafe interaction with logrotate could result in a privilege escalation
CVE-2019-16370
PUBLISHED: 2019-09-16
The PGP signing plugin in Gradle before 6.0 relies on the SHA-1 algorithm, which might allow an attacker to replace an artifact with a different one that has the same SHA-1 message digest, a related issue to CVE-2005-4900.