UK companies facing significant increase in fraud risk from cyber breaches and insider threats
25 Feb, 2016
Cyber breaches and insider threats, which include malicious employees stealing, manipulating or destroying data, are the fastest-growing risks for UK companies according to EY’s 2016 Global Forensic Data Analytics Survey, Shifting into high gear: mitigating risks and demonstrating returns.
The survey was conducted with 665 executives globally across nine industry sectors, including financial services, life sciences, manufacturing and power and utilities.
In the UK, the survey asked 66 respondents to outline their biggest concerns around fraud and corruption. 83% of respondents – the highest percentage globally – felt that cyber breaches and insider threats posed the fastest growing fraud risk. 65% said that internal fraud, such as submitting false travel expenses and entertainment abuse posed the second highest risk – also significantly higher than other countries surveyed. 68% of UK businesses also said that they needed to do more to improve their current anti-fraud procedures.
Paul Walker, EY’s UK Head of Forensic Technology & Discovery Services, explained: “UK companies are facing both old and new challenges in fraud prevention. It is interesting to see that the more ‘low tech’ forms of fraud, such as submitting false receipts, still pose a big concern for many companies as well as the evolving threat of cybercrime, which is now an everyday reality and a relentless challenge in order to stay ahead of the hackers.
“We are therefore seeing more boards and senior management looking towards advanced technology such as forensic data analytics as a critical component of their risk management and compliance programmes. This is especially critical given the current regulatory enforcement environment and market reaction to instances of alleged corporate fraud, bribery and cyber breaches.”
Advanced tech to track down fraud
In response to these increased risks, the use of advanced Forensic Data Analytics (FDA) is becoming more mainstream, with new technologies and surveillance monitoring techniques widely used to help companies manage current and emerging fraud and cyber risks.
The use of visualisation tools, which can show patterns in suspect activity, has doubled over the last two years. Respondents also reported the increasing use of social and web monitoring tools as well as statistical analysis and data mining packages to track down fraudsters.
Paul continues: “Given the level of pressure organisations are facing on fraud prevention, it is no surprise that businesses are taking a more sophisticated approach. Surveillance monitoring programmes which use FDA can help organisations to strengthen their compliance programmes and bolster the confidence of regulators and other stakeholders.”
Increased FDA investment – the global picture
Globally, three out of five respondents said that they plan to spend more on FDA in the next two years. When looking at the reasons for increased investment, the survey found that responding to growing cybercrime risks and increased regulatory scrutiny are the top drivers at 53% and 43%, respectively. How FDA tools are deployed is also changing, with 63% of respondents saying they invest at least half of their FDA budget on proactive monitoring activities.
Paul continued: “The UK Government and regulators have a strong track record of tackling fraud and corruption. Our survey shows that businesses are also taking these threats seriously, especially as fraudsters and hackers find new ways of perpetrating crimes.
“There is, of course, always more to be done and a focus on proactive monitoring as well as continued investment in new technology will ensure UK businesses continue to lead the way in addressing fraud and corruption risks.”
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