Study: Electronic theft surpasses physical theft

Heists of confidential information are coming on strong in the business world because of the easy portability of data and the lack of sufficient controls, according to risk consultancy Kroll.

Lance Whitney Contributing Writer
Lance Whitney is a freelance technology writer and trainer and a former IT professional. He's written for Time, CNET, PCMag, and several other publications. He's the author of two tech books--one on Windows and another on LinkedIn.
Lance Whitney
2 min read

For the first time ever, more companies are suffering from electronic theft than from physical theft, according to the results of a poll released yesterday by risk consultancy Kroll.

The firm's fourth "Annual Global Fraud Report" (PDF) found that the amount of money lost by businesses to all kinds of fraud rose over the past 12 months to $1.7 million per billion dollars of sales from $1.4 million, a gain of more than 20 percent.

And with that overall increase came a notable shift, with electronic theft just edging out physical theft. The theft of information or electronic assets was reported by 27.3 percent of companies over the past 12 months, up from 18 percent in 2009. The theft of physical assets inched down to 27.2 percent from 28 percent last year.


Companies in information-based industries reported the highest amount of electronic theft over the past year, said Kroll. Among the hardest hit were financial service firms (42 percent this year versus 24 percent in 2009), professional services (40 percent versus 27 percent), and those in technology, media, and telecommunications (37 percent versus 29 percent).

The fast pace at which technology changes poses a huge challenge in combatting electronic theft--28 percent of the companies polled said this is the one factor that raises their vulnerability to fraud. But still, only 48 percent said they plan to spend more money on IT security over the next year, down from 51 percent last year.

The fear of fraud, both physical and electronic, has kept almost half of the companies surveyed from taking advantage of buisiness opportunities in certain regions, including China, Africa, and Latin America. The study also found that fraud is typically an inside job, with many businesses pointing the finger at a range of suspects including junior employees, senior management, and outside agents.

"Theft of confidential information is on the rise because data is increasingly portable, and perpetrators--often departing or disgruntled employees--can remove it with ease absent sufficient controls," Robert Brenner, vice president of Kroll's Americas region, said in a statement. "At the same time, there is a growing awareness among thieves of the increasing intrinsic value of an organization's intellectual property. The results of the survey do not suggest other types of fraud are decreasing but merely that the rise in theft of intellectual capital has outstripped other fraudulent activity that has remained constant."

To compile its study, Kroll hired research group Economist Intelligence Unit to poll 801 senior corporate executives across the world about fraud and its effects on their businesses.