As economic crime in South Africa hits record levels, organisations expect cyber crime to become the most disruptive in the next 24 months.
This is according to a PWC's Global Economic Crime and Fraud Survey 2018, released today in Johannesburg. The survey examines over 7 200 respondents from 123 countries, of which 282 were from SA.
PWC defines economic crime as the use of deceit or other criminal conduct to deprive another of money, property or a legal right or to effectuate an economic harm.
The report says South African organisations that have experienced economic crime is now at a staggering 77%, followed in second place by Kenya (75%), and thirdly, France (71%). With half of the top ten countries who reported economic crime coming from Africa, the situation at home is more than dire, says PwC.
Asset misappropriation continues to remain the most prevalent form of economic crime reported by 45% of respondents globally and 49% of South African respondents, says the study. It notes the second most reported crime in SA at 42% and taking third place globally at 29% - is fraud committed by the consumer. This was followed closely by procurement fraud (39% in South Africa versus 22% globally).
Meanwhile, Junaid Amra, forensic technology partner for PwC, said as business models continue to evolve through digital revolution and boundaries between industries and technology blur, many companies in SA expect to be affected by cyber attacks and fraud in the coming year.
As global trends always end up coming to South Africa, organisations in SA should expect to experience cyber attacks like the ones seen in developed countries last year - for example ransomware that crippled Britain's entire National Health Service in 2017 as well as the WannaCry attacks, he added.
The report says cyber attacks have become so inescapable that measuring their occurrences and impact is becoming less strategically useful than focusing on the mechanism that the fraudster used.
The study also says the wide reach of technology and the stealthy growth of fraud are creating a double challenge for all organisations. Companies need to find the 'sweet spot' between effectiveness and cost, and not getting outpaced by fraudsters that are also combining brain and machine power to go on the attack, it adds.
Organisations are looking to use technologies like artificial intelligence and advanced analytics as part of their efforts to combat and monitor fraud, says the report.
The survey shows that companies in emerging markets, including SA, are currently investing in advanced technologies at a faster rate than their counterparts in developed nations, said Trevor Hills, forensic services leader for PwC Southern Africa. Increased technology and analytics result in stronger internal controls, which translates into a newfound focus, says PwC.
"Technology is clearly a fundamental tool in the fight against fraud, but it's not the only one. Ultimately, when it comes to blocking that 'last mile' to fraud, the returns from investment on people initiatives are likely to far exceed those from investing in another piece of technology, said Hills.
"Focusing on human behaviour offers the best opportunity for reducing or preventing fraud, because ultimately, machines don't commit fraud, people do - they just happen to be using technology more and more in these endeavours."
"Many companies are finding themselves caught in a tug of war between three business drivers: the market's appetite for innovative disruptors; shareholders' desire for financial outperformance; and society's expectations for ethical conduct, said Trevor White, PwC partner, forensic services and South Africa survey leader.
The truth is that when businesses misbehave, investors often tend to look the other way as long as their investment is not threatened, says White.
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