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.
By Shivanand Pandit
The deadly coronavirus has done 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 percent of the respondents sensed financial fraud cases would increase in the next 24 months. This was a 22 percent rise over an earlier survey conducted in 2018. Around 70 percent of the respondents sensed losses would increase due to frauds, and 30 percent suspected monetary losses would be 1 percent to 5 percent 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 distance 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 percent of the respondents accepted that probable scams would be unearthed related to data analytics and miscellaneous technology instruments. They evidenced dissatisfaction with traditional measures like internal audit mechanism. Although these respondents hugely believe in technology, less than 5 percent of them have invested in anti-fraud technical knowhow 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.
Shockingly, about 43 percent of the respondents do not have complete faith in their current FRM outlines and think these are insufficient to curb swindling. Therefore, they signalled diverting budgets to implementing improved technologies, carrying out greater FRM courses for third parties and creating consciousness amongst 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 detection, while technology involvements were geared to avoid it altogether.
Approximately 50 percent of these respondents as compared to 33 percent 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 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 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, outside players will be hunted for tactical counsel on this issue.
—The writer is a financial and tax specialist, author and public speaker based in Margao, Goa