Economic crime hits record levels in Canada in the past 5 years
(4 months ago)
TORONTO: Canadian companies are targets for economic crimes, including cybercrime, asset misappropriation, and consumer fraud, according to PwC Canada's bi-annual Economic Crime and Fraud Survey released today. It indicates 55pc of Canadian companies experienced economic crime in the 24 months, a significant increase from 37pc in 2016.
In the past two years, cybercrime has become the most reported economic crime experienced by organizations in Canada (46%), asset misappropriation (38%) and consumer fraud (36%) are close behind.
As organizations across the country are racing to implement new technologies and using data to innovate, they must be more vigilant around managing cyber risks. According to the report, 46% of Canadian organizations (vs 31% globally) said that they've experienced cybercrime in the last two years. In the past two years, Canadian organizations who were victims of a cybercrime were primarily affected by asset misappropriation (32%), disruption of business processes (29%), and extortion (23%). The breaches were typically conducted through phishing (58%), malware (45%), and network scanning (20%).
"Fraudsters are more sophisticated than ever and so organizations must think about fraud dynamically to stay ahead. In an era of radical transparency, companies often don't get to decide when an issue becomes a crisis" says Domenic Marino, National Forensics and Disputes Services Leader, PwC Canada. "Organizations need to invest heavily in their people and technologies to fight fraud and manage it proactively. The cost of economic crime is measured not only in dollars but also in reputation and trust."
The report focuses on different types of fraudsters including consumer, external actors, and internal.
•External actors: One of the biggest blind spots and threats are the people who do business with organizations including customers, vendors, and service providers. They account for 58% of incidents according to the report.
•Internal actors: Many employers trust their employees but the report shows that 35% of economic crime is committed within the organization.
•Consumer: Consumer fraud is the third most reported type of crime in Canada. It encompasses many common kinds of fraud like credit card fraud, insurance fraud, and mortgage fraud. Technology has made it easier for consumers to commit breaches online.
With cybercrime on the rise in Canada, organizations have improved their investments to combat breaches in the past two years: 64% of respondents now have a fully operational response plan in place compared to 31% in 2016. Some of those plans include having a designated Chief Information Security Officer (CISO). Of those organizations with a CISO, only 43% report into the Board of Directors indicating that they there is room to prioritize cybersecurity in an organization.
There is increasing pressure to hold C-Suites and board executives accountable when these breaches happen according to PwC's Global CEO Survey. A breach a can reduce public's trust in an organization if it fails to prevent and/or report breaches and its response plan in a timely manner.
Canadians are lagging behind our global counterparts in the use of emerging technology, like artificial intelligence and advanced analytics to predict, monitor and detect economic crime. The benefits of technology to mitigate risk can help organizations focus their efforts on areas where fraud happens as well as predict how fraud could impact them.
While the report suggests that investments in technology can help mitigate fraud, the most critical investment is in its employees. A majority of Canadian organizations (69%) have a formal business ethics and compliance program in place but only 30% make it a priority to verify and reward their employees' ethical decision-making.