Kroll and CII Launch the Second Edition of the India Fraud Survey

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Kroll, the world’s premier provider of services and digital products related to valuation, governance, risk and transparency, and the Confederation of Indian Industry (CII) today released the second edition of the India Fraud Survey. The findings highlight the rise of corporate fraud during the pandemic with 65% of respondents reporting they have been victims of fraud in 2021 compared to 57% in 2019.

The findings also reflect a significant increase in conflict of interest and levels of supply chain and vendor fraud, which went from 10% to 26% and 5% to 14%, respectively.

Any socioeconomic study carried out after the start of 2020 would have to count the impact of the COVID-19 pandemic; similarly, the results of this report are clearly conditioned by the pandemic. One of the findings highlights that cyber threats are now one of the largest sources of fraud in India, affecting around a quarter of all businesses in the last 12 months. This could be attributed to increased exposure as workers move beyond the firewall because of work from home policies.

Tarun Bhatia, Managing Director and head of South Asia in the Forensic Investigations and Intelligence practice of Kroll, commented, “In the last edition of the survey, there was a lower reported incidence of fraud, which could be attributed to the stigma attached to having suffered an incidence of fraud and consequent under reporting. Over the past few quarters, there has been an attitudinal shift, and companies have become more forthcoming to report incidences of fraud. This is evident from the 14% increase in fraud reporting.”

“We also need to be cognizant of the fact that COVID-19 has had a significant effect on the economic activities and would be expected to coincide with an uptick in fraud,” Bhatia added.

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Reputational damage is cited as the biggest threat from fraud, with 57% of respondents, followed by financial loss (cited by 56%) and the loss of confidential data (cited by 52%).

Given the rise of online threats, the most common steps taken to counter fraud are strengthening IT security (cited by 65%), increasing employee training (60%) and introducing a whistleblowing policy (49%).

After the fraud is detected, 68% of the respondents said they would terminate the fraudster’s employment, ask them to resign or suspend them, and 25% said they would report the employee to law enforcement.

An overwhelming number of respondents (70%) believe COVID-19 has increased the risk of fraud and that the risk will grow in the coming year.