59% Indian Organisations Faced Financial Or Economic Fraud In Last 24 Months: PwC Survey

Almost 59 per cent of Indian organisations have faced financial or economic fraud in the last 24 months. This is 187 per cent higher than the global average of 41 per cent.

According to PwC's ‘Global Economic Crime Survey 2024 – India outlook’, released on Wednesday, the survey declares that fraud is now a predominant issue for Indian businesses, with 50 per cent of respondents identifying it as a major problem.

Globally, around 44 per cent leaders have highlighted cybercrime as their primary concern.

Puneet Garkhel, Partner and Leader, Forensic Services, PwC India, said, "In our 2022 survey, customer fraud led the list, reported by 47 per cent of companies. However, this year's findings reveal a shift with procurement fraud now emerging as the primary concern. Historically, one of the oldest economic crimes, procurement fraud involves illegal manipulation of procurement processes for financial gain. This year, half of our respondents in India identified it as their major worry. Being one of the most disruptive economic crimes, procurement fraud cuts across industries and processes. Therefore, maintaining the integrity of the procurement process is of paramount importance as the reputation of a company rests on it."

PwC's survey reveals a rising concern over forced labour across industries — from manufacturing to fashion and from agriculture to hospitality.

While Indian firms use data analytics to combat procurement fraud with 52 per cent analysing transactions pre-deal and 46 per cent post-deal, only 37 per cent employ real-time payment monitoring with the capacity to block suspicious transactions.

The survey also suggests preventive measures and strategies that one can use to prevent fraud, such as strengthening processes, revising vendor selection, enforcing conflict of interest policies and training the staff.

The survey also noted that while about 33 per cent of all economic crimes are related to corruption and bribery, while 26 per cent of the respondents in India found it to be one of the top three disruptive economic crimes in the past 24 months.

The survey also pointed out that 52 per cent of Indian business leaders are confident and 26 per cent are very confident, in their companies' grasp of third-party interactions. However, 13 per cent did not even have a third-party risk management programme. About 62 per cent of companies surveyed in India said that they had conducted an enterprise-wide fraud risk assessment in the past 12 months. Another 15 per cent were planning such an exercise in the next 12 months. Third-party risk management programmes, including risk-scoring of third parties, were marginally higher in India at 56 per cent than the global level of 54 per cent.

In India, 16 per cent of companies are actively addressing this risk while 24 per cent are evaluating it, 26 per cent are unaware of its importance within their organisation and 19 per cent recognise it but lack assessment plans. Non-compliance could result in harsh penalties, market restrictions and product bans.