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  • Global Mid-Market Corporate Fraud Landscape 2022

Global Mid-Market Corporate Fraud Landscape 2022

06 February 2023

Nearly one in four organisations in Thailand have stated that they have encountered fraud during last 2 years. (1) Frauds, originating from both the interior and exterior of a company, cost them multi-millions of dollars every year. Although they are preventable and can be mitigated to minimize risk, until not long ago, a significant number of companies were not fully cognizant of the importance of developing anti-fraud and anti-corruption programs to prevent, detect and respond to these incidents. However, due to the changing nature of global fraud landscape, an increasing number of companies are apprehending frauds, their nature and their preventions.

Cyber-related corporate fraud is a pervasive threat in today's increasingly digital business environment. The digital business environment is still a very new territory for many organisations. Unfamiliarity with the business environment can create loop holes which in turn bring opportunities for fraudsters. Cyber-related frauds constitute nearly half of the reported frauds.

In Thailand, the occurrence of cybercrime risk rose by 50% during last 2 years. (2) The nature of cyber-related fraud is borderless. It is uncomplicated to locate and target a defenceless organisation anywhere in the world. Thailand is now moving progressively towards digital payments and it is expected to become a cashless society in the next few years. (3) It is certain that the risk of cyber-related frauds will escalate even further in coming years. It is essential for organisations to carefully consult and plan for cyber-related security sector. Cost of commitment to cyber-security measures will cost less than that of damage from the upcoming unseen frauds.

The significant majority of households in Thailand have dropped their income since March 2020. (4) That could create opportunity for fraudsters to recruit more people and elaborate their fraudulent schemes. Nearly two-third of the most significant frauds are carried out by 2 or more accomplice and that portion may increase in the future. They can take advantage of the current situation to train more people to become specialised professionals. They are allocating extended resources and intelligence to outsmart their prey. Relatively new and unregulated areas of booming digital market such as NFT, cryptocurrencies and digital services are becoming their hunting grounds.

Frauds can be a result of deficient internal controls or poor supervision of superior management. More than half of the reported frauds are associated with deficiency in internal control. In Nearly half of the incidents, it has already cost the organisation over 100,000 in USD before detecting a fraud. Keeping employees up to a code of conduct, periodic evaluation and continuous monitoring can be handy to thwart the frauds beforehand. But only less than half of our survey correspondents consider their organisation is sufficiently prepared for upcoming frauds. Still, only 31% stated that they expect their organisation’s investment in anti-fraud measure to increase in the next year.

With the most significant losses often exceeding 1 million in USD, fraudulent schemes present a dire threat to an organisations resilience. The losses generated by fraud impact all stakeholders, including but not limited to owner, employees and communities. When a fraudster strikes, organisations must act swiftly to identify the fraud, attempt to minimise losses and fix security and control gaps. Catching fraud in its early stages can prevent small losses from becoming catastrophic. 30% of the most significant fraud cases lasted for long-term over the course of multiple years.

Companies are deterring frauds with several means including technology, hotlines, trainings, whistle blowers, audit and by mere chance. It is still an option to count on luck for identifying frauds but only 1% of identified frauds are uncovered by chance. Well strategized anti-fraud measures are essential to halt the frauds. It is important to consider whistle-blower anonymity and protection since one out of three identified fraudulent schemes are uncovered through whistle-blowers.  Dedicating appropriate attention to anti-fraud measures can minimize losses, but are organizations fully prepared?

More than 2,000 respondents from 131 countries participated in our global mid-market corporate fraud survey.  Their responses reveal key facts about current threats, the consequences suffered by organisations, and protective actions needed.

Read the full publication for interesting insights on the global mid-market corporate fraud landscape.