Economic Crime Survey: Industrial Manufacturing Supplement

The Industrial Manufacturing Industry Supplement highlights:

•          Economic crime in the industrial manufacturing sector has stayed fairly stable; the mean number of incidents for the sector is lower than across all industries, but average costs are higher.

•          Losses were highest for IP infringement cases; overall economic crime in the emerging markets was more costly than in other parts of the world.

•          Whistle-blowing systems are particularly effective in detecting economic crime in this sector, however this sends a mixed message. Relying on employees to continue to blow the whistle on their colleagues may be a less promising strategy than implementing more rigorous control systems--and detection levels via internal audit reported by industrial manufacturing respondents were down compared to 2005 (16% vs. 2005: 22%)

•          There is room for improvement in company culture:

•          More frauds are being committed by industrial manufacturing senior/top management or middle management .

•          More industrial manufacturing companies chose to do nothing in response to a serious incident of economic crime -- 19%, compared to 10% in 2005, and 17% across all industries in 2007.

Improved sourcing and supply chain management is a high priority for manufacturers and many are looking to emerging markets, but entering new markets means encountering new risks. Some of the most promising markets pose the greatest risks, particularly around intellectual property, a type of economic crime poses a particular challenge for the industry.