Two thirds of professional services businesses hit by fraud

Two thirds (65%) of professional services businesses have been affected by fraud in the last 12 months according to research by corporate security and risk specialists Kroll, which found that the sector was particularly at risk from internal attacks, reports accountancy services Harris & Co.

According to the 2013 Kroll Global Fraud Report information theft, loss or attack affected 14% of professional services companies during the past year. The firm says it is seeing increasing numbers of cases where the work emails of lawyers, accountants and wealth managers have been compromised by cyber criminals.

Kroll warns that once they have access to the genuine email account of an adviser, fraudsters can impersonate them, pose questions to their clients to obtain confidential information about transactions or litigation and give instructions to make transfers or pay invoices of several hundreds of thousands of pounds.

In addition, Kroll’s findings show 15% of professional services firms had suffered the theft of physical assets or stock. The survey puts the average financial damage from all types of fraud at 1.4% of revenue for the sector as a whole.

Four in ten (39%) respondents from professional services companies that had suffered fraud and where the perpetrator was known indicated that a senior executive was a leading participant – the second highest figure for any industry in the survey. The professional services industry also has a higher than average level of management conflict of interest (22% compared to 20%).

Tommy Helsby, chairman, Kroll Advisory Solutions, Eurasia, commented: ‘Perpetrators of fraud are often thought of as faceless hackers in a distant land but our experience shows that to be the exception rather than the rule; the greatest vulnerability is to those who have already got past most of your defences by virtue of being an employee, partner or contractor. It is vital that as well as investing in technology, businesses mitigate the insider threat by focusing on areas like staff screening and due diligence on partners, clients and vendors.’

The overall findings of survey were that 71% of companies in Europe had been affected by fraud in the past 12 months, up from 63% a year earlier. There was an increase in every category of fraud studied, but the greatest rise involved vendors and suppliers, which affected more than a quarter of businesses.