White-collar crime: appearances are deceptive

At 39%, fewer Swiss companies were victims of fraud in the last 24 months than in 2016 (41%). This is the result of the PwC study "Global Economic Crime and Fraud Survey 2018 -... Swiss insights". A trend, however, that should be taken with a grain of salt, according to the consulting firm. This is because only around a third of respondents had carried out a general fraud risk assessment in the same period. This puts Switzerland far behind in a global comparison (54%). In addition, increasingly sophisticated cyberattacks often remain undetected for a long time, PwC said.

Despite a whole series of high-profile fraud cases in the media, white-collar crime in Switzerland appears to be on the decline: While many more companies globally (49%) reported having been victims of fraud today than two years ago (36%), this number had decreased slightly in Switzerland, as mentioned at the outset. PwC leads the global survey conducted with executives worldwide at two-year intervals.

Lack of control

On closer inspection, however, the Swiss results paint a different picture than is apparent at first glance. "To a certain extent, the lower fraud rate reported in Switzerland is definitely based on an effective legal framework and system for law enforcement. However, this also presents a temptation for organizations to overestimate the effectiveness of their systems and controls," notes Gianfranco Mautone, Head of Forensic Services and Financial Crime at PwC Switzerland. Only one in three Swiss companies surveyed said they had conducted an adequate evaluation of their own fraud risk during the survey period. Worldwide, the figure is already more than half (54%). This means that there is a serious risk that white-collar crime in Switzerland will go unnoticed or unreported.

 High monetary damage

 The average monetary loss attributable to a reported case of fraud in Switzerland is around CHF 9.5 million, he said. "These substantial sums are due, among other things, to the size of the Swiss economy and the banking and financial services sector as an attractive target, and they show that fraud cases in Switzerland are by no means trivial offenses," Mautone emphasizes.

In addition, bribery and corruption have increased sharply. In 2018, 27% of respondents said they had been asked to pay a bribe. This compares with just 9% in 2016, according to the PwC study. One in five Swiss companies also believe they have lost contracts to competitors who paid bribes (2016: 11%). According to the consulting firm, this increase suggests a growing awareness of bribery and corruption. Nevertheless, it also shows that companies need to increase their awareness of potential threats and their impact on competitiveness.

 Technology as an efficient protective measure

Next to asset misappropriation (51%), cybercrime is the second most common type of fraud in Switzerland at 44%. In this context, it is often a means to an end to commit other types of fraud. Despite this, only 54% of companies ran an operational cybersecurity program; that's 5% less than the global average. "Especially in the wake of the digitization of vendors and consumers, the increasing complexity of cyberattacks, and the high expectation of data protection, companies need to make cybersecurity an urgent priority at the highest management level," emphasizes Reto Häni, Head of Cybersecurity and Privacy at PwC Switzerland. Every employee must understand and be involved in company-wide risk management, he adds.

The fact that cybercrime is perceived as the most significant threat going forward at 41% is a step in the right direction, he said. Proportionate investment in technology would help companies to identify, monitor and ultimately reduce fraud risks more efficiently. Switzerland has a lot of catching up to do in terms of international standards, the PwC press release concludes.

More on the topic of property crimes in the just published police crime statistics 2017.