Analytics, Business, Crime, Economics, Estonia, EU – Baltic States, Technology

The economic crime and fraud survey carried out by PwC every two years among some 5,000 entrepreneurs from 99 countries shows that 47% of respondents have been exposed to economic crimes and 35% to various client fraud, while the number of cyber crimes has increased significantly. These are the highest rates registered in the last 20 years, PwC said.

Magi said that although Estonia is not represented among the 99 countries that took part in the survey, the trends are very similar in Estonia as well -- fraudsters are clever and as a company grows, the risks also increase. "At the same time, we can see in this region, too, that companies are gradually contributing to risk analysis and associated policies, hence, the direction is right," Magi said in a press release.

It appears from the survey that fraud may hit companies from any direction, 39% of respondents said that in the last two years, most economic crime incidents came from outside the company, for example, in the form of customers, hackers, resellers or suppliers.

Altogether 37% of incidents have been related to internal fraud and over 20% involve collusion by both external and internal parties. A total of 13% of respondents, who experienced fraud in the last two years, said that they lost over 50 million US dollars as a result of this. When it comes to direct expenses, however, the most expensive types of fraud are cartels, inner circle transactions, tax fraud, money laundering and bribes and corruption.

Highlighted in the survey are the importance of preventive activities and how investing in the right skills and technology may prevent the worst. Approximately half of the organizations that participated reacted to crimes by implementing and developing control mechanisms, while 60% of respondents said their institution improved as a result of this.

Nevertheless, it appeared from the survey that some half of the respondents did not carry out any investigation upon detecting fraud and only a third of the respondents informed the management board of the crime.

"In the case of suspected fraud, it is critical to clarify the situation and failure to investigate is a very short-sighted decision. In our experience, even seemingly trivial investigations often lead to the detection of very large-scale fraud," Magi said.

He added that although the number of various instances of fraud is rising, the handwriting of different frauds is often similar, and a skilled specialist can detect fraud in various disciplines with the help of the right tools, approaches and data analysis technology, even from very complex structures and large volumes of data.

PwC is an organization providing business consultation services. The company is represented in altogether 157 states, employs over 276,000 people and has been operating in Estonia since 1992.