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February 25, 2016updated 31 Aug 2016 12:43pm

Cyber crime rise among UK organisations driven by growth in IoT and cloud storage

News: UK firms face more external and internal attacks by more senior staff.

By CBR Staff Writer

An 11% rise in economic crime against UK companies saw cyber crime becoming the fastest growing economic attack.

Growing adoption of cloud-based storage and ‘internet of things’ are some of the reasons for the steep rise in cybercrime in the UK.

According the survey conducted by PwC, external perpetrators committed about 60% of the economic crimes, compared to 56% in 2014.

The survey also found that there is a rising trend of ‘silver fraudster’ among UK corporate, with strong shift towards more senior and experienced employees committing such fraud.

It could be a greater concern for UK corportates as fraud carried out by senior management could be difficult to detect and prevent, the report said/.

According PwC’s Global Economic Crime Survey, there is a dip in number of organisations reporting the crimes committed by their own employees but what could concern them is the rising number of frauds perpetrated by senior management.

The number of frauds committed by senior management has more than doubled during the period from 7% to 18%.

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Number of economic crimes committed by employees over the age of 50 tripled from 6% to 18% while employees from middle management were responsible for 36% of the crimes, while in half of the cases the crimes were committed by employees aged older than 40 years.

The Economic Crime Survey found that 45% of internal fraudsters had worked for more than five years within the organisation they defrauded and 21% had more than a decade of service. In contrast, the number of junior staff carrying out economic crime has fallen since 2014, from 45% to 28%.

PwC Global corporate intelligence leader Mark Anderson said: "Hackers are now more ambitious than ever. Their aim goes beyond targeting financial information to include a company’s ‘crown jewels’ – customer data and intellectual property information, the loss of which, can bring down an entire business.

"The threat of cybercrime is now a board level risk issue, but not enough UK companies treat it that way."

About 44% of UK corporations have faced cyber crime during the last two years, emerging as the leading economic crime.

The number of cyber crime has seen 20% growth, recording fastest growth among all economic crimes.

Other economic crimes including bribery, asset misappropriation and procurement fraud have declined compared to cyber crime.

PwC’s Global & UK Forensics leader Andrew Gordon said: "While the prevalence of traditional fraud, such as asset misappropriation, has fallen since 2014, there has been a huge rise in organisations reporting cybercrime. Technology is driving almost every other area of economic crime as well.

"Business needs to minimise the opportunities for economic crime through rigorous fraud risk assessment, supported by a culture based on shared corporate values and robust policies and compliance programmes."

About 51% of UK organisations believe that they could be the next victim of cyber crime in next two years, which would make cyber crime as the biggest economic crime in the country.

Despite looming threat, about a third of the organisations don’t have any cyber crime response plan to deal with such crimes, while only 12% of respondents said that they law enforcement authorities have the necessary skills.

The greatest concern among UK companies is the potential service disruption, if cyber attack happened, with 31% saying that they could face a medium-to high impact.

However, about half of them said that their organisations would not face any impact on their reputation while 60% are not worried about the potential theft of intellectual property rights.

About 86% of UK organisations have introduced formal business ethics and compliance programmes but only 63% back up these rules with regular training and communication.

PwC’s UK Forensics practice head of ethics and compliance Tracey Groves said: "Economic crime is a question of culture, not just compliance. Even the best compliance programmes will fail if a company’s culture accepts wrong-doing as a norm.

"While it is encouraging that so many UK organisations understand the value of having a code of conduct, it’s crucial to back it up through regular training and engagement with employees. Unfortunately our survey shows this just isn’t happening enough."

PwC Global Economic Crime Survey 2016 is based on opinion of 6,000 participants from 115 countries.

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