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Economic Crime Is Alive and Well in the U.S., PwC Survey Finds

Tammy Whitehouse | February 20, 2014

Fraud is on the rebound in the United States, with U.S. incidents of economic crime surpassing the global average, according to a recent global poll by PwC.

The survey of more than 5,000 executives in 95 countries concludes that 45 percent of organizations in the United States suffered some type of fraud in the past two years, even higher than the 37 percent globally. Nearly one-fourth of the U.S. respondents said their experience of economic crime involved an accounting fraud, up from 16 percent in 2011.

Technology has become an Achilles' heel for many companies, says Steven Skalak, partner in PwC's Forensic Services. Of U.S. entities that experienced fraud in the past two years, 44 percent in the survey called it a cybercrime event; additionally, an equal number said they expect to suffer a cybercrime incident in the next two years.

Skalak says companies need to get their arms around their technology risks -- and soon. “The digital age is here to stay,” he says. Until recent times, technology hasn't been viewed as a potential vulnerability to fraud, he says. “The virtual world opens up a whole host of doorways into a corporation, and a whole host of ways its assets can be attacked.”

Those charged with protecting the corporate assets in many cases represent a generation that didn't grow up in the virtual world, so is still learning what technology can do and what risks it presents, Skalak says. That segment of leadership needs to “convert the mindset from the physical world to the virtual world,” he says. Experts need to work more closely and develop a more holistic approach to defending against a variety of schemes. “People are going to be faced with this more in the next two, three, five years,” he says.

In addition to identifying cybercrime as one of the most serious risks for economic crime that companies face, the survey also should serve as a reminder that no one is immune, says Skalak. “No one can tax a relaxed posture toward this issue,” he says. “Everyone would hope that the world is moving in a direction where the rule of law, the effectiveness of regulation, the power of corporate cultures and controls would be curtailing or reducing economic crime. While it changes in shape, the underlying quantity of economic crime activity and the number of people affected by it remains remarkably constant.”