Overall, 34 percent of global respondents said their organisations were victims of economic crime, a 13 percent increase since 2009, according to the results of PwC`s 2011 Global Economic Crime Survey.

In the last 12 months 37% of organizations in Russia reported being victims which is significantly lower than in 2009.

More than a third of businesses and other organisations around the world were victims of economic crime in the last 12 months, according to respondents to PwC’s 2011 Global Economic Crime Survey released today. And nearly a quarter of victims said they were subject to cybercrime - the use of technology as the main element in the economic crime.

Overall, 34 percent of global respondents said their organisations were victims of economic crime, a 13 percent increase since 2009. Theft or asset misappropriation (cited by 72 percent) was the most common type of economic crime reported, followed by accounting fraud and bribery and corruption (24 percent each) and cybercrime (23 percent). Overall, 11 percent of global respondents, nearly half of them C-suite executives, said they did not know if their organisation had suffered a fraud.

In Russia, 37% of organizations reported being victims in the last 12 months alone. This percentage is significantly lower than 2009 (71%) and 2007 (59%). There are three possible explanations for it: a reduction in the incidences of economic crime, a reduction in the rate of detection of frauds themselves or a change in the willingness of organizations to report economic crimes that they are aware of. However, Russia still suffers more fraud than the average E7 developing nation. And despite the reduction in reported incidents, 73% of Russia respondents believe their organisation remains highly vulnerable to economic crimes within the next 12 months.

Asset misappropriation remains the most common type of economic crime reported in Russia (72%), whilst, unsurprisingly, bribery and corruption continues to be a major challenge in the Russian market – 40% of respondents were affected in the last year. 23% of respondents report suffering from accounting fraud and cybercrime, which is a growing threat. Among other types of fraud incidents were mentioned anti-competitive behavior (17%) and IP infringement (13%).

The majority of investigations (83%) are done in Russia “in house”. 55% of organizations reported that an internal party working alone was responsible for the fraud committed, 36% considered that a party external to the organization played a role.

What is the financial and non-financial damage from economic crimes in Russia? 22% of Russian organizations that suffered an incident lost over USD 5 million. And whilst in 2011 40% of respondents reported that monetary value of annual losses from fraud was less than USD100 thousand, at the same time 7% mentioned that losses ran to over USD100 million. This is over ten times the global average (0.6%). While the direct costs of economic crime may seem alarming enough on their own, one would not ignore the collateral damage from fraud, i.e., damage to a company`s brand and customer trust; to the share price and stakeholder trust; to the company`s business relations and relations with regulators. 13% of Russian organizations highlighted employee morale and business relationships as the most significant factors affected by economic crime. The importance of staff morale to success, productivity and efficiency of any organization as well as the additional costs incurred due to the high staff turnover should be incentive enough for executive management to act decisively on fraud prevention measures.

There is a strong correlation between conducting fraud risk assessments and detecting fraud. 29% of Russian respondents perform no fraud risk assessment at all, and a further 29% do it once a year. Organisations undertaking fraud risk assessments were x times more likely to detect fraud that their peers.

The most popular detection methods have remained the same for several years. Corporate security is again at the top of the list, although its effectiveness, as well as that of internal audit, appears to have declined in comparison to previous years followed by external tip offs and internal audit. 59% of Russian respondents employ a whistle-blowing mechanism (WBS). 52% of those respondents who do have a WBS find this mechanism either effective or very effective and 44% of those organizations report fraud which is higher detection rate than the average.

“Economic crime all over the world continues to be pervasive, affecting both large and small organisations worldwide without discrimination, said John Wilkinson, partner, Forensic services leader for CEE, Russia and CIS, PwC. No industry or company in any country is immune from the impact of fraud. Although this survey shows a reduction in reported fraud in Russia, this is not yet a trend, and Russian organisations remain concerned that they could be victims of economic crimes. Russian companies need to continue to focus on fraud prevention measures. Among the critical success factors are a robust tone from the top of organisations, making security everyone`s business, building fraud specific controls and reviewing the risks regularly, and developing a clear response plan, including having access to professional experts and building a solid communication strategy”

Globally, cybercrime now ranks as one of the top four economic crimes. The perception of cybercrime as a predominantly external threat is changing, and organisations are now recognising the risk of cybercrime coming from inside as well. Respondents said the Information Technology Department was the most likely source of cybercrime internally. IT was cited by 53 percent of respondents, followed by Operations, 39 percent, Sales and Marketing, 34 percent, and Finance, 33 percent.

In Russia, 23% of respondents suffered from cyber crime. 25% of Russian respondents believe that the cybercrime threat to their organization has increased in the last two years. 14% of respondents believe that the greatest cybercrime threat comes from within the organization, 34% from outside of it.

Almost 4,000 respondents in 72 countries, including 126 representatives of Russian Leading entities took part in the 2011 Economic Crime Survey – 47% higher than that for 2009 Economic Crime Survey.

The sixth Global Economic Crime Survey was carried out between June 2011 and November 2011. The survey questionnaire had three sections: a section with general profile questions; a section with comparative questions looking at what economic crime organisations had experienced; and a section on this year’s special topic, cybercrime. 3,877 people from 78 countries filled in the online survey. Participants were asked to answer the questions with respect to their organisation and the country in which they are mainly based.

Press release of PricewaterhouseCoopers International Limited.