According to a survey carried out by KPMG across a cross-section of top executives in 800 organizations in different verticals, respondents in the ICE space feel most vulnerable to corporate espionage. While 84% of respondents in the ICE sector apprehend espionage attacks on their organizations, the financial sector comes in second—with 81% fearing attacks.

The high fear factor in these two sectors has been attributed to the competitive edge of both—resting on intangible assets like databases, knowledge pool and proprietary information, which are susceptible to espionage. Numerous security leaks and modern-day hack attacks have made corporate espionage one of the most serious concerns for the corporate world. Nearly 75% of those surveyed said that corporate espionage could affect their business in future.

As a result, 51% of respondents have framed some policies or procedures to counter corporate espionage. The most common measures were allowing access to sensitive information on a need to know basis (82%) and restricted physical access to sensitive areas (79%). Improved IT systems as a way to prevent corporate espionage was at 55%. Other preventive measures mentioned by respondents included: review by top management of sensitive information, display of identification tags for all personnel and visitors, shredding of paper before disposal, and continuous efforts to build loyalty. The largest number of fraud were experienced in the retail sector (83%) followed by IT (67%).

In several cases, the fraud was discovered by more than one method. Internal methods of detection like internal controls (41%) and internal auditor review (33%) continue to be more effective than external methods with the latter method being able to discover only 2% of the frauds. Respondents believed that their organization was defrauded due to poor internal controls (51%), followed by collusion between supplier and vendor particularly in the manufacturing sector, employee and management (40%) and background checks of employees and vendors not being comprehensive (29%).

Respondents have undertaken improved internal controls (57%) and extensive background checks (58%) as measures to prevent fraud. Organizations who have not conducted fraud diagnostic reviews seem to be susceptible to the risk of fraud.

This appears to be justified by the finding that 44% of the respondents who have not undertaken a fraud diagnostic review were victimized by fraud.

Balaka Baruah Aggarwal/CNS in New Delhi

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