A mid-2016 survey by global advisory firm Kroll has found that corruption, frauds and security-related risks are dissuading nearly a fifth of global firms from entering India despite a promising market opportunity.
The survey revealed that the percentage of companies affected by fraud had reduced to 68%, as compared to 80% in 2015.
“As many as 545 senior executives, 11% of them domestic firms, participated in the survey. Nearly a fifth of our respondents are dissuaded from investing in the country due to frauds and security concerns,” said Reshmi Khurana, MD and head of South Asia, Kroll.
She said while corruption is a major risk that “is growing”, laws like the FCPA (Foreign Corrupt Practices Act) in the US deter potential investors.
“India is an attractive destination for foreigners given that it is the fastest growing large economy. On the other hand, investors are deterred due to fraud, corruption and security concerns,” she said.
The report said India topped the Brics grouping of emerging countries in at least five fraud categories, including conflict of interest at management levels, corruption and bribery, money laundering, internal financial frauds and market collusion.
The survey results also reveal that the most common perpetrators of fraud and security incidents in India over the past 12 months were current and former employees.
With regards to cyber security, a broad range of cyber incidents was reported in India. 73% of survey participants reported that they had experienced a cyber incident in the past 12 months, though this was 12% lower than the global average.
“Cyber risk presents a major threat to Indian companies today. 59% of respondents in India said that their employee records had been targeted in the last 12 months, compared to 40% of the respondents globally. Cyber risk is set to grow in India as the country becomes more digitised. At the same time, as the laws governing cyber crimes strengthen, companies in India will face greater reputation risk from having more obligations to disclose breaches that they may suffer. We advise companies operating in India to address cyber risk as a long-term threat, not focusing only on technology related risks but also addressing processes and employee related risks that lead to cyber incidents,” Tarun Bhatia, managing director (investigations & disputes), Kroll, said.
The respondents were from various industries including technology & telecom, natural resources, construction, engineering and infrastructure.
Source: dnaindia.com