Fraud on the Rise: Top Executives Under Scrutiny

As regulators intensify their scrutiny of corporate conduct, a new era of accountability is emerging. The latest survey reveals that 58% of economic crimes in Namibia are committed by internal actors, with senior management responsible for 16% of reported internal frauds.

A Global Phenomenon

The demand for transparency and accountability is no longer limited to developed markets, but has become a global phenomenon. In nation-states where the rule of law is weak, public outrage has led to politicians and business leaders being held accountable, and even governments have been toppled.

Fraud Risk: A Strategic Business Challenge

Fraud risk has evolved from an operational issue to a strategic business challenge that requires dynamic management at the highest level. The cost of fraud can be substantial, with investigations costing up to ten times as much as the fraud itself. This has led companies to spend more on investigations and interventions than the loss experienced from the crime.

Reputational Risk: A Growing Concern

The CEO and board are now accountable for reputational risk, which outstrips regulatory risk. The public’s perception of a company’s ability to respond appropriately to an issue can lead to punishment before a plan is even in place.

Survey Highlights

• 92% of serious incidents of fraud were brought to the attention of senior management
• Almost all respondents have a formal business ethics and compliance programme in place
• Senior management responsible for 16% of reported internal frauds
• 58% of economic crimes in Namibia are committed by internal actors

The Way Forward

As businesses navigate the complex landscape of ethical conduct, they must balance their need for innovation and financial performance with society’s expectations for transparency and accountability. The C-suite must be cautious not to prioritize financial gains over ethical behavior, as this can lead to a loss of goodwill faster than it is gained.

Hope from the Start-up Generation

There is hope, however, among the start-up generation, where younger entrepreneurs are leading the way in embedding fraud data analytics from the start and modeling a new era of transparency and profitability.

Key Statistics

• 58% of economic crimes in Namibia are committed by internal actors
• Senior management responsible for 16% of reported internal frauds
• 92% of serious incidents of fraud were brought to the attention of senior management
• Almost all respondents have a formal business ethics and compliance programme in place
• 73% of Namibian respondents indicated their organisation had a formal business ethics and compliance programme