More than four out of five (82%) manufacturing companies have experienced a fraud incident in the past year, according to the 2015 Kroll Global Fraud Report. This was the highest level of fraud faced by any sector covered by the report and equated to an average loss of revenues totaling 1.1%, also the highest figure of all sectors.
The findings reveal the most common type of fraud experienced in the sector was theft of physical assets or stock, reported by 34% of manufacturing companies. This is the third highest incidence of any sector in the survey and significantly higher than the overall average of 22%. It was followed by vendor, supplier or procurement fraud (23%) and information theft, loss or attack (16%).
In the last year business partners and suppliers from outside the company posed a particular issue for the manufacturing industry. A third of all manufacturers surveyed which experienced fraud and where the perpetrator was known said that a vendor or supplier was involved. Nearly one out of five companies (18%) said it was a joint venture partner.
Manufacturing is the only industry this year where vendors were more often at fault than senior or middle management. Little wonder that increased collaboration between firms is one of the top drivers of increasing risk exposure, cited by 20% of respondents, once more the highest number for any industry.
Manufacturers are also the most likely to report that they are at least moderately exposed to vendor and procurement fraud (63%). However the industry appears to be taking steps in the right direction to remedy the situation. Forty-three percent plan to invest in partner and supplier due diligence in the next year, substantially above the survey average of 33%.
Tommy Helsby, Chairman, Kroll, commented:
“What our report and our day-to-day experience tell us is that despite companies making greater and more sophisticated efforts to combat fraud, it remains a serious business threat that cannot be completely eliminated. Furthermore, the adverse impacts of such incidents cannot be underestimated. Fraud is not going away and continues to be on the rise, but the well prepared business can do much to stay one step ahead and be positioned to eliminate or mitigate it.”
The Kroll Global Fraud Report 2015 includes a full detailed industry analysis across a range of fraud categories and regions. To obtain a copy please visit http://www.kroll.com/global-fraud-report