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Introduction

As the new global leader of EY’s Fraud Investigation & Dispute Services practice, I am delighted to share EY’s 15th Global Fraud Survey. It contains insights from business leaders on the risks and challenges organizations face in fighting fraud and corruption in an era of significant technological advance. The survey also discusses how companies are addressing these risks through enhanced technologies and increased compliance efforts.


Between October 2017 and February 2018, we interviewed 2,550 executives from 55 countries and territories. The interviews show that fraud and corruption in business are not going away. We used the results to understand whether existing fraud prevention efforts by management and increased government enforcement are effective enough to fight fraud and corruption.

Organizations increasingly use digital technology to change the way they do business, which is heightening their exposure to fraud, corruption and other risks. In the era of changing technology, anti-corruption enforcement by agencies such as the Department of Justice (DoJ) and the Securities and Exchange Commission (SEC) in the US, the Serious Fraud Office in the UK, and prosecutors in countries including Brazil, Netherlands and France continues to accelerate. In this report, we consider the impact that recent enforcement has had on the prevalence of corruption and whether companies’ compliance efforts are keeping up.

We found that many businesses have reached a certain level of maturity in their compliance programs, with the vast majority of executives interviewed aware of anti-corruption policies, procedures and intent from management. However, we see a mismatch between this awareness and employee behavior — and we continue to see ethical failures, business losses and consequent reputational damage.

So why integrity and why now?

The survey results suggest that the benefits of demonstrating organizational integrity go beyond the avoidance of penalties and can actually improve business performance. This makes sense: doing the wrong thing is a lost opportunity to do the right thing.

Finally, we explore the future of the compliance function. Advances in technology, particularly in artificial intelligence, machine learning and automation, can be used to transform legal and compliance functions. What is the new role of the compliance officer when monitoring is performed by data analytics and real time training is delivered by artificially intelligent robots?

Do the right thing because it’s the right thing to do, not because a code of conduct says you should.

What lessons have we learned for data protection compliance?

Increased global connectivity means that anyone with access to company data, anywhere in the world, can exploit weaknesses in data security. Companies’ critical digital and physical assets are therefore at greater risk of theft, damage and manipulation by insiders than ever before.

Our survey was conducted against a backdrop of controversy regarding customer data breaches and the forthcoming implementation of the EU General Data Protection Regulation. The survey results suggest a significant gap in awareness of GDPR for countries both inside and outside of the EU. To ensure effective compliance with GDPR, business will need to consider the required organizational changes and not just the introduction of more “paper policies”.

It will be interesting to see if companies with a reputation for integrity give more confidence to consumers and therefore make their customers less likely to request deletion of their personal data.

This report is intended to raise challenging questions for boards. It will, we hope, drive better conversations around fraud, corruption and integrity more broadly. We thank all those who participated in our survey for their contributions and insights.


Andrew Gordon
EY Global Leader
Fraud Investigation & Dispute Services

 

 

 

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