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Over 40 pc of Romanian companies, the victims of economic crime in the past two years

Over 40 pc of Romanian companies, the victims of economic crime in the past two years

42 percent of Romanian organisations reported to have been the victims of fraud or economic crime in the past two years, slightly lower than the global (49 percent) and Eastern European (47 percent) reported rates, according to this year’s edition of PwC’ Global Economic Crime and Fraud Survey.

However, not all companies are fully aware of the fraud risks they face and related consequences such as financial impact, reputational damages or personal and company liability.

“One can easily build an impression that economic crime has reached an all-time high, not just in Romania, but also globally. We believe the high reported rate is driven by the increased awareness around fraud nowadays and improved detection mechanisms which contribute to an enhanced level of effort to address this serious issue”, comments Ana Sebov, PwC Romania Forensic Services Leader.

20 percent of Romanian organisations estimate losses as a result of economic crime of between USD 100,000 and USD 1 million, while 16 percent say more than USD 1 million. Across the globe, 19 percent of organizations have incurred losses over USD 1 million — with 1 percent recording losses in excess of USD 100 million over the past two years. Intangible costs associated with fraud, such as the negative influence on employees’ morale or business relations, irreversible damage to reputation or brand can increase overall costs.

Costs related to fraud incidents can be significantly higher. The amount spent by 32 percent of Romanian organisations on investigations and other interventions was either the same as or higher than the amount lost through the economic crime.

The top three types of economic crime reported by Romanian companies are fraud committed by the consumer (44 percent), cybercrime (40 percent) and business misconduct (36 percent).

According to PwC study, two out of three Romanian organizations have been targeted by cyber-attacks in the last 24 months. Most common mechanisms used by attackers reported by 37 percent of Romanian companies are phishing and malware.

This year’s survey revealed a significant increase (+6 percent to 52 percent) in the share of economic crime committed by internal actors. In the past surveys, financial services has traditionally proven to be the industry most threatened by economic crime. According to this year’s survey, Insurance (62 percent), Agriculture (59 percent); the Communications sector (including telecom) (59 percent); Financial Services (58 percent), Retail and Consumer Goods (56 percent) and Real Estate (56 percent) were amongst the sectors reporting the highest levels of fraud.

However, one in ten Romanian respondents said their organisations have still not conducted any kind of fraud risk assessment.

“Our survey is meant to provide a clearer picture on economic crime, what constitutes fraud and the measures that could be taken by Romanian organisations to prevent and detect it. Do not wait for coincidence to identify fraud”, Ana Sebov concluded.

About Anca Bernovici