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Companies Affected & Frequency of Occurrence

Almost half of all companies in Germany have been victim to economic criminality in the past two years. For major corporations, the figure is even higher at over sixty percent. For major corporations in Germany, the figure is even higher at over sixty percent. There have been some notable cases worldwide in telecommunications, retail and finance, but the problem of economic criminality is one from which no branch of commerce or industry is immune.

Our experience confirms this. Size does not protect an enterprise, and there are no fields of industry that can be thought of as safe. What is more, practically all processes – purchasing, sales, distribution, production and others – are exposed to this risk. Subsidiaries are also at risk, often more so – the further away from the parent company they are located and the lower the level of supervision, the higher the chances of acts of economic criminality taking place.

Recent studies on economic criminality indicate that the number of companies affected is likely to continue to increase. And companies are often far too complacent. In Germany, for example, less than half of all companies think that they will fall victim to economic criminality in the next five years, yet there is strong evidence to suggest that around 80% of them have inaccurately assessed their level of risk. And there is an ironic complication here: it is not uncommon for the very companies who think they are the safest to be at the highest risk because (due to their sense of security) their controls are weak and they have either no or ineffective internal auditing.

Why this poor judgment? Sometimes it is due to lack of problem-consciousness, sometimes naivety, sometimes it is due to lack of knowledge about the extent of damage that can be done. The less a company is aware of the risks it faces, the more easily it will fall victim. That also applies to those organizations that may be more aware but still do not take the threat seriously enough. Experience has shown that denial is dangerous!

What tends to happen is that such companies detect very little dishonest activity (because they are not looking properly) and consequently do not discover any appreciable losses. They then feel that this is confirmation that they were right in the first place when they said that they did not have a problem. The reality, however, is that their losses due to economic criminality are often extremely high, and to make matters worse, due to lack of control it is impossible to say exactly how high.