There has been a surge in new age technology fraud such as cyber-crime and financial misreporting.
According to the Middle East Fraud Survey report from Deloitte, the Middle East region has witnessed a massive increase in fraud during the COVID-19 pandemic.
Over 100 anonymous respondents from a wide spectrum of industries in both the public and private sector participated in the digital questionnaire.
The Deloitte survey explores the extent and various types of fraud, the impact of the global pandemic on fraud risks due to changes in the business environment and measures being taken to prevent, detect and respond to fraud.
The survey showed that 48 per cent of participants have witnessed more fraudulent incidents this year compared to earlier years, and 35 per cent felt it has increased since the start of the COVID-19 pandemic. The top factors in the current business environment contributing to fraud were identified as dependency on technology and remote working.
New age fraud
“When the findings were compared to a similar survey conducted by Deloitte Middle East in 2010, there has been a change in the most prevalent types of fraud over the last decade. Theft of physical assets and misuse of information were the most pressing concerns in 2010 compared to the threat of new age technology fraud such as cyber-crime and financial misreporting today,” said Collin Keeney, Partner, Financial Advisory, Deloitte Middle East.
Responses indicate that proactive awareness campaigns and training for employees on emerging fraud risks resulted in reduction of fraud. However, more than 50 per cent of respondents highlighted that there is a limited understanding of emerging fraud risks in their organisations. These organisations often place reliance on traditional techniques, static data, and irregular modification of a framework.
About 55 per cent of the respondents have a basic policy level fraud risk framework such as anti-fraud, code of conduct and anti-bribery and corruption policies. However, they lacked other necessary elements such as periodic training, senior management reporting, periodic fraud risk assessment and dedicated anti-fraud technologies.
Further increase
“More than two-thirds of the respondents felt that the current business and economic disruptions could increase fraud risk in their organisations over the next two years,” said Keeney.
The study found that 41 per cent of the companies in the region do not have a dedicated fraud risk management and investigation team and feel that the current fraud risk framework is not adequate to prevent and mitigate the risk of future fraud. Furthermore, the respondents are not aware of risks pertaining to their industry and the best practices to be followed.
(Except for the headline, this story has not been edited by The Finance World staff and is published from a syndicated feed.)
