The global travel, leisure and transportation sector has suffered a dramatic spike in fraud over the past year, a new report has revealed.
According to the third Kroll Annual Global Fraud Report, losses due to fraud in the sector are up 75% on last year’s total loss. Companies lost an average of $10.2 million to fraud over the three years between 2007 and 2009, while for the three years between 2006 and 2008, losses totalled $2.5 million.
In the last three years, 47% of respondents experienced theft of physical assets – the third highest rate of any industry; 32% experienced internal financial fraud; and 30% faced regulatory or compliance breaches – in both cases, the greatest proportion of any sector.
Although the sector has increased its spending on anti-fraud measures, efforts to defeat the fraudsters were undermined by the recession. This resulted in 25% of companies admitting money-saving measures that weakened internal controls and increased vulnerability to fraud.
The report, which is the result of a worldwide survey of 700 senior executives from 10 sectors, found fraud was up in travel, leisure and transportation; financial services; retail, wholesale and distribution; and health care, pharmaceuticals and biotechnology.
Five other sectors – manufacturing; technology; media and telecoms; natural resources; and consumer goods and construction – saw a decline in fraud.
Kroll managing director financial investigations practice Richard Abbey said: “Any crime needs a motive and an opportunity. The economic downturn has provided an increased motive for fraud – perhaps turning previously honest employees to crime in light of lower financial rewards, or pressure to meet financial targets.
“However, at the same time, the decline in liquidity has also reduced the opportunity for the determined fraudster.”
“As we emerge from recession, businesses and investors should be extra vigilant as we are likely to witness a different set of motivations from sophisticated criminals who have been starved of opportunity in recent times.”