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Economic crime is everywhere and ever-more-costly

Economic crime is as old as business itself. It's been an easy ideological target for lawmakers and activists, especially in recent years following the widespread fraudulent financial practices that helped bring on the Great Recession.

So, have companies learned their lesson and become more vigilant and self-policing when it comes to combating corruption, fraud, cybercrime, misappropriation and other related acts? The answer, apparently, is no.

A newly released international survey by PricewaterhouseCoopers (PwC) finds economic crime remains a real and underappreciated problem across a wide spectrum of businesses.

The 2014 Global Economic Crime Survey (GECS) polled more than 5,100 businesspeople from 95 countries. More than half of the respondents worked for organizations with more than 1,000 employees, and more than one-third represented publicly traded companies.

The survey results are eye-opening.

More than a third of respondents -- 37 percent -- said they were victims of economic crime. Overall reports of bribery and corruption rose around 13 percent compared to the previous, biannual survey. And incidents of cybercrime are on the rise, to the point where it was the survey's fourth-most reported type of crime.

Steven Skalak, the study's lead editor, believes people have become more aware of cybercrime because many businesses have been forced to publicly announce security breaches. But the threat is real -- and growing.

"More financial institutions are under attack," he says, "more places where useful personal data is stored. Banks, department stores, healthcare organizations are being attacked in order to accumulate personal data, that can be a predicate for future crimes -- by putting together the ability to mimic a person."

Economic criminals are also taking advantage of the very complex, electronic and globalized nature of modern business transactions, creating what the GECS calls a borderless threat.

"Many businesses are often unaware that their systems have been probed or penetrated by criminal elements, let alone the implications these security breaches could have on their business activities," the survey notes. "Corporate management must increasingly confront a difficult question -- how do you protect yourself when you do not even know you are under attack?"

Skalak says those multilayered international operations can also increase the threat of economic crime along a company's supply chain and distribution channels.

"We have a lot of clients, global companies, and they've got a lot of subsidiaries and operations in a lot of different parts of the world," he says. "A lot of them don't know what their second-, third- and fourth-tier subsidiaries are spending money on. They don't have transparency directly into the payments. That's a level of complexity that can be cured with some attention, and we think reduce the risk of economic crime to the organization."

Another real concern for businesses, according to the GECS, are behaviors that put a company's employees at risk of becoming involved in criminal behavior.

"When the integrity of your employees gets eroded, to the point where they engage in a corrupt act or they engage in an anti-competitive act or something like that, this is where the stakes really get a lot bigger for the company," says Skalak. "These are the economic crimes that we see as the most damaging, and the ones that require the most attention in terms of avoidance."

But Skalak also notes some very positive changes over the past three to five years when it comes to how companies acknowledge and handle issues like corruption. And more businesses, he says, are looking into the operations of their suppliers and distributors to ensure they're not involved in questionable or criminal behavior.

At the same time, there appears to be a greater understanding that economic crime goes well beyond fraud, bribery and theft, and that it can ultimately damage a business' brand, trade secrets, patents and operational know-how.

"Knowing what those things are and making sure you're focused on protecting the right thing is really important," Skalak says. "You can have great security at your warehouse so nobody can ever steal your product. But if somebody can steal the plans for how it's made because you're not paying attention, you can suffer a much greater loss."

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