Business leaders in Barbados and the Eastern Caribbean are being urged to see cyber risk as a serious threat to their operations and become proactive and nimble in their response to such threats. This caution comes on the heels of the latest PricewaterhouseCoopers (PwC) survey, which showed that cybercrime tops the list of current threats facing businesses, while emerging risks from environmental, social and governance (ESG) reporting fraud and platform fraud could impact businesses in the future.
The tech, media and telecommunications sector experienced the highest incidence of fraud across all industries, according to PwC’s Global Economic Crime and Fraud Survey 2022, which shows organisations’ perimeters are vulnerable, and external fraudsters are becoming a bigger threat as attacks increase and become more sophisticated. The survey of 1,296 business leaders from across 53 countries found that cybercrime, customer fraud and asset misappropriation were the most common crimes experienced by organisations, regardless of revenue.
Cybercrime poses the biggest threat to small, medium, and large businesses, after the impact of hackers rose substantially over the last two years. The rise of digital platforms opens the door to myriad financial crime risks, and 40 per cent of those encountering fraud experienced some form of platform fraud. In this year’s survey results, cybercrime came in ahead of customer fraud, the most common crime in 2020, by a substantial margin.
Forty-two per cent of large businesses reported experiencing cybercrime in the period, while only 34 per cent experienced customer fraud. Bruce Scott, cyber leader for PwC in the Caribbean, said: “Businesses are seeing an increase in threats from outside the organisation with perpetrators quickly growing in strength and effectiveness. Defence against these external threats requires new thinking.” He added: “Organisations need to be more agile than ever to respond to these converging threats, and adopt new approaches and technologies to predict and prevent fraud.”
André Knight, Cyber Senior Manager, PwC East Caribbean, said: “Organisations throughout the Caribbean region, including here in Barbados and across the East Caribbean, should see cyber risk as an emerging and very real threat to their business regardless of size or industry. Given this, strong measures and controls to such cyber risks are becoming even more imperative for the operation of organisations”.
While just under half of organisations (46 per cent) reported experiencing fraud or economic crime within the last 24 months, the impact of these crimes has been more substantial. Among companies with global annual revenues over $10 billion, 52 per cent experienced fraud during the past 24 months.
Within that group, nearly one in five reported that their most disruptive incident had a financial impact of more than $50 million. The share of smaller companies (those with less than $100 million in revenues) affected was lower; 38 per cent experienced fraud, of which one in four faced a total impact of more than $1 million.
The growing maturity of the technology, media and telecommunications sector helped it identify a significant increase in fraud activity since 2020 with nearly two-thirds of companies experiencing some form of fraud, the highest incidence of all industries. Emerging risks, including ESG reporting fraud (the act of altering ESG disclosures so that they do not truly reflect the activities or progress of an organisation) and supply chain fraud, have the potential to cause greater disruption in the next few years, according to the research.
For example, just eight per cent of organisations encountering fraud in the last 24 months experienced environmental, societal and governance (ESG) reporting fraud. Yet, as ESG continues to increase in importance to stakeholders, the incentive to commit fraud in this area may grow. Similarly, one in eight organisations experienced new incidence of supply chain fraud as a result of the disruption caused by COVID-19, and one in five sees supply chain fraud as an area of increased risk as a result of the pandemic. (PR)