Organizations’ exposure to fraud and corruption risks has increased tremendously in a technologically dominated world, says the EY’s Global Fraud Survey 2018, Integrity in the spotlight – The future of compliance. The report highlights that 40% of India respondents indicated widespread bribery and corruption in business. There is increasing justification of unethical behaviour at the workplace as well as gaps in integrity – 1 in 5 respondents in India said that offering cash payments can be justified, and 1 in 6 said bribery is commonly used to win contracts. However, India respondents also said that some of the key advantages of demonstrating integrity are successful business performance (80%) and positive customer perception (78%). This shows inconsistency between organizational intent and actual performance of employees.
Arpinder Singh, Partner, and Head – India and Emerging Markets, Fraud Investigation & Dispute Services, EY said “Macroeconomic developments, market pressures, new regulations, enforcement and digital disruption have led to a shift in India’s risk landscape. Fraud, bribery, and corruption continue to escalate, turning exceedingly complex and ingrained within businesses. In such trying times, management needs to boost the integrity agenda, redefine compliance programs and adopt a technology-centric approach driven by data analytics to minimize ethical lapses, business losses, and reputational damage.”
The survey conducted by EY’s Fraud Investigation & Dispute Services practice covers insights from business leaders on trends and challenges that organizations may face when fighting fraud and corruption in an era of technological advancement. The key findings include:
Managing fraud, bribery and corruption – a herculean task – The propensity of fraud and corrupt practices is rising globally despite enhanced enforcement standards, new laws and regulations being rolled out as well as innovative, data-driven compliance programs.
- 44% of India respondents said that at least one of the practices such as offering cash, entertainment, personal gifts and misstating financial performance is acceptable for business survival
- 12% stated their company experienced a significant fraud in the last two years
- Global enforcement agencies and regulators have levied more than US$11 billion of financial penalties since 2012
Integrity as part of management agenda – Most companies are beefing up their anti-fraud and anti-corruption efforts through customized compliance and risk mitigation programs, whistle-blowing mechanisms and web-based training. This shows a contradiction with respect to employee behaviour as individual misconduct still prevails.
- 34% of India respondents expressed that its HR’s and 26% said its management’s responsibility to ensure that employees behave with integrity
- 74% said that their companies have clear penalties for breaching policies
- 46% stated avoiding regulatory scrutiny and penalties as one of the important benefits demonstrating integrity
Will the sanctity of data be preserved effectively? – Data protection and data privacy issues have magnified substantially with improved global connectivity and accessibility. It is paramount to safeguard an organization’s mission-critical assets against the complex vulnerabilities of a digital world.
Only 18% of India respondents were aware of EU’s General Data Protection Regulation (GDPR) that will make every entity accountable and responsible for EU citizens’ Personally Identifiable Information
- Globally, awareness stood at 40%, which suggests a significant gap in awareness of GDPR for countries both inside and outside EU
- 20% recognized cyber-attacks as one of the greatest risks to businesses