Cybercrime Explodes: New Report Shows Alarming Rise in Financial Fraud

The latest 'Financial & Cyber Fraud Survey' by Grant Thornton Bharat reveals that fraud incidents have surged post-pandemic, affecting one in two organizations surveyed. Notably, 77% of Indian companies have reported an increase in fraudulent activities. The survey highlights cyber fraud, asset diversion, and regulatory issues as the primary challenges impacting business operations and financial integrity.

Nearly half of the respondents link the rise in fraud to the shift from onsite to remote work, which has weakened internal controls. Cyber incidents account for 64% of reported frauds, emphasizing the vulnerabilities businesses face in an increasingly digital environment.

“Our survey shows a growing awareness among organizations about fraud prevention, with 60% prioritizing cybersecurity and anti-fraud technologies in their strategic plans," says Samir Paranjpe, Partner at Grant Thornton Bharat. "It's crucial to adopt advanced technologies like AI and machine learning, yet only about 20% of surveyed entities have done so,” Paranjpe adds.

The financial impact of these fraudulent activities is significant, with one-fourth of the organizations surveyed suffering losses of INR 1 crore and above, and three-fourths experiencing financial damages exceeding INR 5 crore. In response, more than 60% of organizations support collaborating with forensic professionals to investigate frauds. The most affected industries include Technology, Media, and Telecommunications (58%), Financial Services (51%), and Manufacturing (46%), highlighting the need for industry-specific anti-fraud strategies.

The survey also reveals that 84% of organizations experiencing fraud noted the involvement of external perpetrators, either acting alone or in collusion with insiders. This is particularly concerning in sectors like financial services, where complex regulations and cross-border operations increase risks.

"Our survey underscores the impact of regulatory dynamics, with 68% of respondents citing regulatory changes and enforcement actions as key drivers for establishing governance and cybersecurity protocols. This necessitates a robust, proactive approach reinforced by strong internal controls and a culture of compliance to build resilience and mitigate fraud risks,” shares Rahul Lalit, Partner at Grant Thornton Bharat.

Post-COVID-19, 73% of organizations have enhanced their governance and compliance frameworks, 63% have implemented increased awareness training for employees, third parties, and customers, and 62% are conducting regular control assessments of high-risk areas. By adopting tailored solutions and advanced technologies, organizations can strengthen internal controls, foster a culture of awareness, and ultimately enhance trust, resilience, and competitiveness in today's complex market.