PwC survey: M'sian organisations largely reactive in combating economic crime

Nor Ain Mohamed Radhi

KUALA LUMPUR: A survey found that many Malaysian organisations are still largely reactive in combating economic crime. According to PricewaterhouseCoopers (PwC) Global Economic Crime and Fraud Survey 2018 (Malaysian report), the number of economic crime experienced by respondents has risen to 41 per cent, compared to 28 per cent in 2016. PwC Malaysia managing partner Sridharan Nair said the survey also found that 69 per cent of the most impactful frauds suffered by organisations were committed by internal scammers. “What’s more alarming was that out of the 69 per cent, 32 per cent of frauds were committed by senior management. “That is a concern because if the leaders did not set the right tone by having a strong anti-fraud corporate culture, then the message that get across the organisations is ‘these sort of conduct is acceptable’,” he said in a press conference held today, in conjunction with the launch of the report. Meanwhile, PwC Consulting Associates (M) Sdn Bhd Partner and Forensic Services and Risk Consulting Leader Alex Tan said the survey revealed that business conduct or misconduct takes the top spot of the three most common types of economic crime with 45 per cent, followed by asset misappropriation at 41 per cent and bribery and corruption at 35 per cent. “In terms of bribery and corruption, there has been a slightly worrying of increase of cases over the last four years; with 2014 at 19 per cent, 2016 at 30 per cent and now at 35 per cent. “While the number may be lower than (that of) neighbouring countries, it could potentially be due to the fact that many Malaysian organisations were reluctant to report them,” he said. He said among the principle drivers of economic crime within the organisations were opportunity (85 per cent), incentive or pressure to perform (42 per cent) and rationalisation (39) per cent. Tan said based on the survey, it was also found that 42 per cent of respondents viewed a strong corporate culture, which encourages the use of detection methods like tip-offs and whistleblowing hotlines, to be the most effective at rooting out crime. “This was followed by 31 per cent of respondents who reported that fraud was detected through methods beyond the influence of management.

“Meanwhile, 27 per cent respondents reported that fraud was detected through corporate controls such as suspicious activity monitoring, fraud risk management, internal audit, corporate security (both IT and physical security) and data analytics.” For cybercrime in organisations, Tan said the survey found that 22 per cent of Malaysian respondents reported to had experienced cybercrime in the past two years. “On harnessing technology to address fraud, 25 per cent respondents said they did not have a cyber incident response plan.

“However, the number of respondents who confirmed they have a cyber incident response plan in place has increased to 57 per cent, compared to 35 per cent in 2016.” The PwC’s survey for Malaysia involved 124 respondents and was conducted from June 21 to Sept 28. The Malaysian respondents represented 19 industries, with more than 50 per cent from publicly listed companies and four per cent from government organisations. © New Straits Times Press (M) Bhd