75% of construction companies affected by fraud in the past year

According to a recent report, three quarters of construction, engineering and infrastructure companies have been victim of fraud in the past year.

The results from the 2015 Kroll Global Fraud Report showed that the most common form of fraud in the industry was theft of physical assets or stock, with 36% of construction companies reporting experience of this. This was followed by vendor, supplier or procurement fraud with 24% of respondents claiming to have experienced this.

The construction industry was second only to the retail sector in terms of incidence rates and was the highest in any sector in terms regulatory or compliance breach fraud with 18%.

In the past year, construction companies reported that their exposure to fraud had increased – 92% of respondents felt that this was the case, the highest in any sector.

The reasons cited for this increase in exposure were high staff turnover (49%) and entry to new, riskier markets (21%).

When it came to responsibility, a senior executive or middle manager was involved in a fraud against the company at 32% of all construction businesses polled.

Despite the difficulties caused by high staff turnover, only 30% of construction companies said they would invest in background screening in the coming year, with only 25% planning to spend on management controls – less than the survey average.

Tommy Helsby, Chairman, Kroll, commented: “Much media attention is focused on external threats to companies, highlighted by high profile cyber attacks, but the evidence revealed in our report and our day to day experience tells a different story.

The respondents in this survey indicate the greatest single cause of fraud in their companies is their own employees. It is not enough for companies to protect themselves from outside threats – both external and internal vulnerabilities need to be addressed.

“What our report and our day-to-day experience tell us is that despite companies making greater and more sophisticated efforts to combat fraud, it remains a serious business threat that cannot be completely eliminated.

Furthermore, the adverse impacts of such incidents cannot be underestimated. Fraud is not going away and continues to be on the rise, but the well prepared business can do much to stay one step ahead and be positioned to eliminate or mitigate it.”

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