Cybercrime is a key fraud risk in India: FDA survey

Mumbai, 20 January 2016

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  • 40% of the respondents are concerned about cybercrime (cyber breaches or insider threats)
  • 83% said they use forensic data analytics (FDA) when investigating internal frauds
  • 75% said they deployed FDA tools and techniques for early fraud detection

Rising risks around cybercrime, internal fraud, and bribery and corruption have been key concerns for Indian organizations over the past two years, states EY’s 2016 Global Forensic Data Analytics Survey, Shifting into high gear: mitigating risks and demonstrating returns. The India findings of the survey state that these risks are leading to increased investment in forensic data analytics (FDA) - 75% of the respondents agreed to deploying FDA tools when investigating incidents and/or monitoring risks around bribery and corruption risks and 65% around cyber breaches. The key benefits of using FDA include early detection of fraud (75%) and increased business transparency (70%).

Arpinder Singh, Partner and National Leader, Fraud Investigation & Dispute Services, EY said,”Cybercrime is perceived as the fastest growing fraud risk (40%), followed by bribery and corruption (36%) in India. 80% of the respondents stated that management’s awareness of the benefits of FDA in the company’s anti-fraud program needs to improve; globally, this stood lower at 68%. It was noted that organizational reluctance to invest significantly in FDA is partly due to lack of management buy-in around its potential return on investment. But we see that FDA has emerged as a critical component that can have a significant impact on growing threats such as internal fraud, cybercrime, corruption, money laundering etc. and companies need to proactively intertwine it within their anti-fraud programs.”

The survey conducted by EY’s Fraud Investigation & Dispute Services practice revealed that businesses need to cope with a host of reforms driven by both, risk factors and regulations. This has augmented the scope of risk aversion and detection that the company board and the senior management need to implement internally.

Mukul Shrivastava, Partner, Fraud Investigation & Dispute Services, EY elaborated, “The risks faced by organizations on account of cybercrime are ever increasing. However, organizations continue to be reactive and use FDA tools just for investigations. They need to switch tracks and use FDA techniques to proactively counter such risks. Using FDA, organizations can effectively analyze their internal data sets (network traffic, emails, logs, etc.) to identify threats based on historic data, learn and then improve their IT systems and controls.”

Anil Kona, Partner, Fraud Investigation & Dispute Services, EY said, “Organizations have started realizing the benefits of proactive forensic data analytics to identify fraud. With the cases of fraud increasing alarmingly, we can leverage the power of forensic data analytics for continuous monitoring, insider threat management, early warning alert generation etc. to detect frauds very early and prevent them in most cases.”

Proactive stance toward FDA investment

With just 55% of the global respondents saying that their FDA spend is sufficient, a drop from 64% in our  2014 survey, it is no surprise that three out of five say that they plan to spend more on FDA in the next two years. In India, 66% of respondents are spending at least half their FDA budget proactively; which is higher than global (63%). We believe this proactive stance is as a result of greater regulatory enforcement concerns, as well as improved surveillance analytics and compliance monitoring offerings in the market.

Higher deployment of FDA

In response to these increased risks, the use of advanced FDA is becoming mainstream, with new technologies and surveillance monitoring techniques widely used to help companies manage current and emerging fraud and cybercrime risks. The rising maturity of corporate FDA efforts is also evident through the growing sophistication in their use of data. Globally, 75% of respondents routinely analyze a wide range of structured and unstructured data, enabling them to gain a comprehensive view of their risk environment.

FDA maturity leads to positive results

68% of Indian respondents stated they get positive results or recoveries from the FDA tools that they use. The findings also show that there are striking similarities among those organizations that have reported positive results from their FDA efforts, such as:

  • Investing more of their total compliance and anti-fraud spend in FDA
  • Harnessing sophisticated analytics tools, including social media, web monitoring and data visualization, in combination to identify rogue activities, patterns and trends
  • Incorporating larger data volumes and a wider variety of data sources (both structured and unstrucured)

Notes to Editors

About the survey

Between June and September 2015, researchers from Longitude Research, a business-to-business research and content agency, conducted 665 interviews across 17 countries with organizations actively using FDA. Respondents had to be the decision-makers responsible for their company’s anti-fraud program.

About EY

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for or clients and for our communities.

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This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.

About EY’s Fraud Investigation & Dispute Services (FIDS) practice

Dealing with complex issues of fraud, regulatory compliance and business disputes can detract from efforts to succeed. Better management of fraud risk and compliance exposure is a critical business priority — no matter the industry sector. With our more than 4,200 fraud investigation and dispute professionals around the world, we assemble the right multidisciplinary and culturally aligned team to work with you and your legal advisors. And we work to give you the benefit of our broad sector experience, our deep subject matter knowledge and the latest insights from our work worldwide.