The survey found that corporate India was anxious about the rise in scams during Covid-19 but had done little to invest in anti-fraud technology nor had faith in management to reduce this risk
The deadly coronavirus has done significant damage globally. The world of business is no exception. According to a survey conducted by Deloitte Touché Tohmatsu India (DTTI), business disturbances and haziness in the wake of the pandemic have amplified anxieties in corporate India about increasing scams and scandals.
More than 80% of the respondents sensed financial fraud cases would increase in the next 24 months. This was a 22% rise over an earlier survey conducted in 2018. Around 70% of the respondents sensed losses would increase due to frauds and 30% suspected monetary losses would be 1% to 5% of revenues. According to them, it would be mainly cybercrimes that are likely to lead to fraud conspiracies. Understanding scam-connected susceptibilities has become very challenging because of distant working and modifications in business models. These developments have given birth to hostile sentimentalities. The survey showed that such hostile feelings were further worsened by faith in static data for fraud risk management (FRM) struggles.
Roughly, 35% of the respondents accepted that probable scams would be unearthed and these resorted to data analytics and miscellaneous technology instruments. They showed their discontent towards traditional measures like the internal audit mechanism. Although these respondents hugely believe in technology, less than 5% of them have invested in anti-fraud technical know-how in the last 180 days. This indicates poor understanding of long-lasting merits of technology and restricted desire for making such investments in a disturbed situation.
About 43% of the respondents did not have complete faith in their current FRM outlines and think these are insufficient to curb swindles. Therefore, they signalled diverting budgets to implementing improved technologies, carrying out greater FRM courses for third parties and creating consciousness among employees for fraud stoppage.
Nikhil Bedi, Partner and Leader, Forensic, Financial Advisory, DTTI, praised the efforts of corporate India and said that several Indian establishments had directed a bulk of their FRM efforts towards fraud discovery, while technology involvements were geared to avoid it altogether.
Approximately 50% of these respondents as compared to 33% of those in the earlier survey believed in looking for lawful action against the parties engaged in fraud. Bedi said this belief may be due to governing changes that are progressively pushing for larger disclosures as well as the enlarged use of technology by organisations. This could help in documentation and maintaining proof to help in quick decision of lawsuits.
One more significant outcome of the survey is the development of the FRM bio-network, including third-party experts such as law firms, forensic accountants, technology corporations and others. Bedi said that the efficiency of FRM in future will depend on constructing a reliable ecosystem of specialists and while internal teams will continue to develop and manage known dangers and outside players will be hunted for tactical counsel on this issue.
The writer is a tax specialist, financial adviser, guest faculty and public speaker based in Goa.
The opinion/s expressed in the article are that of the author’s and do not necessarily represent or reflect the policy or position of this magazine.