Fraud risk high in Asia, survey finds

Of Asian companies surveyed, India showed the highest number of companies affected by fraud at 68 per cent, followed by China and Indonesia, which each saw 65 per cent of firms affected in the past year, compared with the global average of 61 per cent, according to the report.
The findings are contained in a study commissioned by Kroll Advisory Solutions with the Economist Intelligence Unit of more than 800 senior executives worldwide.
“This year’s Global Fraud Report provides some encouraging indicators on the evolving fraud landscape in Asia-Pacific compared with last year, but we also note that complacency looks to be developing among Asian businesses on the very serious fraud risks they face,” said Tadashi Kageyama, senior managing director of Kroll Advisory Solutions, Asia.
In Southeast Asia, the global fraud survey revealed notable trends in Indonesia, one of the fastest-developing markets in Asia. Indonesian companies are increasingly looking to move on to the global stage, in particular with investments in Asia and Africa, but 35 per cent of Indonesian companies said they had put off investment in at least one foreign market because of perceived fraud issues, compared with 27 per cent globally.
This contrasts with Chinese companies, of which only 8 per cent were dissuaded from entering a foreign market. Indonesia nonetheless remains one of the countries with the highest prevalence of fraud, particularly information theft, with 35 per cent of respondents claiming a loss in this area, according to the survey.
Though not as bad as sub-Saharan Africa, where nearly 77 per cent of the companies doing business faced some form of fraud, India remains the Asian country with the highest number of companies affected. It is experiencing an average of 1.2-per-cent revenue loss arising from fraud, significantly higher than the global average.
Despite a broad recognition by Indian respondents of fraud risk, Indian companies are less likely than average to invest in anti-fraud strategies, most notably in the area of information theft, where only 40 per cent of companies plan to invest in information-technology security. Moreover, 22 per cent of Indian firms weakened internal controls frequently as a result of budget constraints – one of the highest figures of any country or region.
Complacency about fraud risks appears to be developing in China. Despite a drop in the overall prevalence of fraud in the country to 65 per cent, concern over fraud risks is falling faster than incidences.