The Forensic Fraud Barometer and the impact of the Global Pandemic*

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Von Philippe Fleury und Cédric Biedermann

The KPMG 2019 Forensic Fraud Barometer revealed a significant increase in fraudulent crimes and financial losses due to fraud compared to the previous year. Although certain individuals and organizations are more at risk than others, everyone is a potential victim of fraud. And the worse is still to come.

Before the new year starts let us take a look back. Fraudulent behaviors in Switzerland in 2019 with an average loss of CHF 7.7 million has more than doubled compared to 2018, according to cases judged by Swiss courts and published in the press. The actual figures are likely to be even higher since KPMG’s Fraud Barometer only covers public court cases reported in the media.

Types of offenders and victims

The majority of crimes are committed by professional fraudsters, followed by employees and members of the management. However, what stands out is the significant increase in the total loss amount attributable to members of the management: CHF 136 million compared to CHF 12 million in 2018, followed by losses perpetrated by employees with CHF 63 million. Although outsider threats can be detrimental, internal threats have a much larger financial impact. As a result, it is important to put in place behavioral risk assessments to identify these malicious and secretive insiders.

Everyone is at risk of experiencing a costly offense. Based on our analysis, there are regions such as the “Mittelland”, Lake Geneva and Zurich, which have higher fraudulent crime rates than the rest of Switzerland. Furthermore, findings suggest that customers with CHF 96 million for 12 cases and public institutions with CHF 144 million for 10 cases are the victims who suffered the biggest losses. Financial institution losses increased from CHF 15 million in 2018 to CHF 43 million in 2019.

The most efficient way of recognizing insider and outsider threats is by evaluating the weaknesses and opportunities of your business model and structure and taking the necessary measures for improvement.

Fraud during the Global Pandemic

Whereas the Fraud Barometer focused on the cases judged in 2019, the corona crisis offered more opportunities. Economic trends and global pandemic pose a big risk to your company’s safety regarding fraudulent behaviour. We are currently facing a global Covid-19 pandemic that is having significant financial implications, such as a rise in unemployment and the risk of a recession. These changes have led to a dramatic increase in fraudulent activities including scams, bribes, phishing and cyberattacks. For instance, we could observe numerous reports of online phishing and ransomware attempts via emails linked to Covid-19 through the impersonation of entities such as the Federal Office for Public Health or the World Health Organization. Furthermore, fake websites are taking advantage of the covid philanthropy by creating fake charities or by selling nonexistent health products. These are just a few examples to draw your attention to the potential threats that could impact your company and employees.

Solutions

The global pandemic had a substantial effect on fraudulent activities by giving rise to more opportunities for scams, bribes, cyberattacks and phishing. As a result, it is important to have adequate and effective security measures and trainings in place to keep your company and employees safe. Prevention is key. These measures should be applied consistently and efficiently.


Über die Autoren

Philippe Fleury joined KPMG AG in 2007. In 2014, he was promoted as Head of Forensic Switzerland. Philippe Fleury was educated as attorney-at-law and worked from 2002 to 2007 as Head of section and management member of the Swiss Money Laundering Control Authority in Berne. He obtained an Executive MBA at IE, one of the most prestigious Business School in 2009. He specializes in fraud investigation, compliance issues and litigation support as well as in anti-money laundering, financial crime and corruption matters in Switzerland as well as internationally. His key skills include leading complex fraud and misconduct investigations helping companies to tackle financial crime, and conducting complex compliance and financial crime mandates in banks.

 

Cédric Biedermann, KPMG’s head of the Corporate Intelligence team for the Forensic department has over ten years of forensic experience and is a Certified Insider Threat Program Manager and Fraud Examiner. He specializes in leading investigations regarding misconduct such as mobbing, psychological and sexual harassment, unfair treatment, extortion, exploitation, undisclosed conflicts of interest as well as corruption, bribery and fraud. As a Risk Profiler, he develops and implements effective and sustainable threat detection and prevention programs for a broad range of clients and institutions in order to assess the reliability, suitability and trustworthiness of the insider threat.


* Die meisten Blogbeiträge erscheinen in Deutsch. Ausnahmsweise erscheinen Beiträge auch in Englisch und Französisch, den Sprachen, in denen Schweizer Expertinnen und Experten in der Bekämpfung von Wirtschaftskriminalität häufig arbeiten.

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