Internal fraud risks drive use of forensic analytics

Corporate groups feel cyber crime is fastest-growing risk, says EY survey

Concerns about cyber breach, internal frauds, bribery and corruption are driving Indian companies to use forensic data analytics to investigate these risks. According to EY's 2016 Global Forensic Data Analytics Survey, 83 per cent of Indian respondents said they use forensic data analytics to investigate cases relating to internal fraud - largely those relating to travel and entertainment abuse, collusion, and so on. Bribery and corruption risks (75 per cent), cyber breach (65 per cent) and financial statement fraud (63 per cent) are among the other areas where Indian companies use such tools.

Cyber crime is perceived as the fastest growing fraud risk in India (40 per cent), followed by internal fraud (35 per cent), bribery and corruption (35 per cent), and capital statement fraud (33 per cent), the survey said.
 

"Forensic data analytics has emerged as a critical component that can have a significant impact on growing threats and companies need to proactively intertwine it within their anti-fraud programs," said Arpinder Singh, partner and national leader, fraud investigation & dispute services, EY.

Globally, the survey found a growing sophistication among corporate groups in their use of data analytics tools. Around two-third of respondents said they routinely analyse a wide range of structured and unstructured data, giving them a comprehensive view of their risk environment.

The risk perceptions of Indian companies have changed since 2014, when EY conducted a similar global survey. The weightage given to risks arising from money laundering (from 33 per cent in 2014 to 20 per cent in 2016), mergers & acquisitions (from 30 per cent to 28 per cent), financial statement fraud (from 45 per cent to 33 per cent), and capital project (58 per cent to 30 per cent) have come down since the last survey.

Singh said strategy of some Indian companies to outsource "risks" to third-parties may not work going forward, as under the current legal framework companies are accountable for actions of their vendors and suppliers.

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KEEPING VIGIL
Percentage of respondents using forensic data analytics for assessing various risks

• 83% for internal fraud
   
• 75% for bribery and corruption
   
• 65% for cyber breach
   
• 63% for financial statement fraud