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Most fraud is an inside job, says survey

Joan Goodchild | Nov. 11, 2011
Fraud cost organizations 2.1 percent of earnings in the past 12 months, which is equivalent to a week of revenues over the course of a year, according to the Kroll Annual Global Fraud Report, a recent survey that polled more than 1,200 senior executives worldwide.

Plansky said among some of the more surprising findings was that executives reported they felt unprepared to deal effectively with corruption. According to the survey, only 27 percent of respondents said they are well-prepared to comply with regulations, such as the Foreign Corrupt Practices Act and UK Bribery Act. Of those companies that are subject to one of these two laws, less than half, 43 percent, have trained senior management, agents, vendors and foreign employees to be compliant with one of these laws, and just 39 percent have assessed the risks arising from them. Only 37 percent of companies surveyed believe that their due diligence provides a sufficient understanding of a potential partner's or investment target's compliance with these acts.

"This is remarkable because the consequences of running afoul (of these laws) can be devastating," said Plansky. "These respondents are sophisticated business people. They understand these are issues and it's causing anxiety. I think as a result you care going to see increased attention to this."

 

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