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Cybercrime, corporate fraud cost global economy $11tr

Dubai - Cybersecurity Ventures expects global cybercrime costs to grow by 15 per cent per year over the next five years, reaching $10.5 trillion annually by 2025.

Cybercrime is inflicting the global economy $6 trillion in damages while corporate fraud is costing businesses across the world $5 trillion annually, according to data provided by panelists at a symposium on internal audit.

The sheer magnitude of the losses wreaked by cyber and corporate crimes underscores the critical role of internal auditors in the timely detection and prevention, the first-ever symposium on Benchmarking in Internal Audit in Dubai was told.

The one-day symposium was organsied by the UAE Internal Auditors Association (UAE-IAA). If the cost of the cybercrime were measured as a country, then it would be the world’s third-largest economy after the US and China.

Cybersecurity Ventures expects global cybercrime costs to grow by 15 per cent per year over the next five years, reaching $10.5 trillion annually by 2025, representing the greatest transfer of economic wealth in history and risks the incentives for innovation and investment.

According to the ResearchAndMarkets.com, the cybersecurity market in the Middle East and Africa was valued at $1.9 billion in 2020, and it is expected to reach $2.9 billion by 2026 and register a compound annual growth rate (CAGR) of 7.92 per cent during the forecast period of 2021-2026.

In 2020, the UAE suffered an at least 250 per cent increase in cyber-attacks amid the Covid-19 pandemic. “Technology is only one solution. As threats become ever more sophisticated there is a need for international collaboration to govern behaviour in cyberspace and enhance the security and trust that is essential to the functioning of a global digital economy,” Dr Mohamed Al-Kuwaiti, head of Cyber Security, UAE Government, had said at a separate event.

A research by Crowe UK and the Centre for Counter Fraud Studies at University of Portsmouth, Europe’s premier fraud research centre, has found that the financial cost of fraud is $5.38 trillion or 6.4 per cent of global GDP.

Abdulqader Obaid Ali, chairman of UAE IAA Board of Governors, said corporate fraud, which is estimated to cost some $5 trillion globally, is not widespread in the Gulf region. “The UAE is number one in the Middle East in terms of corporate governance and transparency, according to Transparency International.

Internal auditors are contributing to enhance the image of the country that it is a region of good governance and transparency.”

Ali said internal audit departments must go through a quality audit to make sure that their system and the way they are doing the audit are aligned with a global standard. He urged young audit professionals to embrace technology as digitisation is bringing in a revolution.

“If you do not keep abreast of technology, you will become obsolete as technology has changed all our lives and changed every single profession. In order to be a good internal auditor you have to do three things: Know your business, ask questions and be flexible. At the same time, you should know how technology works,” Ali said.

Michael Fucilli, vice-president for Risk Management at Annaly Capital Management, said corporate frauds are on the increase. “Consumers, customers and shareholders are paying the price of this corporate fraud. It affects the performance of companies and ultimately impacts the bottom lines, and the economy in general.”

“There are two types of fraud: employee fraud and corporate fraud. Internal auditors are focusing on the wrong fraud; they look at employee frauds first, but they should also look at corporate fraud. Internal auditors have a responsibility to detect fraud in the first instance. It all starts with good governance,” said Fucilli.

— issacjohn@khaleejtimes.com