It goes without saying that the evolving methods of committing commercial crimes has exacerbated organisations’ risk of falling victim to these incidents. Amongst these incidents are fraud, money laundering, corruption, theft, cybercrime and data breaches.
Across industries, the rate of suspected digital fraud attempts globally rose when comparing the first four months of 2021 with the last four months of 2020.[1] In South Africa, the overall percentage of fraud attempts increased by 7% during the same period.[2] South Africa’s rate of reported economic crime remains significantly higher than the global average rate.
Added to this is the harsh reality that incidents of higher value serious economic crime have doubled in the past 2 years. There’s also been a disturbing increase in the level of involvement of senior management as the main perpetrator, escalating from 20% in 2018 to 34% in 2020.
As technology continues to advance and organisations’ increased move towards running business virtually, there are also greater opportunities for commercial crimes. Fraud manifests in different ways with key features covered in the elements of the crime itself. Rising cases of security, fraud risks, data breaches, identity theft and corruption illustrate how this type of risk is growing for various organisations. Furthermore, the financial and reputational consequences lead to unfavourable circumstances.
It is challenging to eliminate the risks of commercial crimes that organisations face. However, there are steps an organisation can take to counteract commercial crimes. At the outset, proactively planning for potential risks. Awareness is imperative in assisting organisations to implement appropriate measures to mitigate these risks as well as dealing with such incidents should they occur.
While a majority of South African companies have policies and procedures in place that include training and monitoring, it is recorded that only around half of organisations in South Africa are dedicating resources to risk assessment, governance, and third-party management. Other steps which may be taken include
- Conducting an investigation;
- Immediately disclosing the incident to the board of directors;
- Taking the necessary disciplinary action;
- Conduct internal training; and
- Bolster internal controls, policies and procedures
To achieve effective risk management, organisations should focus on security solutions, fraud detection tools and employee and customer education about how to detect any potential issues. How an organisation responds to commercial crimes when it occurs can have potentially dire consequences to an organisation’s economic well-being.
[1] TransUnion’s analysis of global fraud trends for first four months of 2021.
[2] See footnote 1 above.
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