IP theft or loss issues continue to rise as global fraud increases

82% of companies have suffered a fraud incident in 2016, a seven percentage point increase in comparison to 2015 according to the recently published Global Fraud and Risk Report (Kroll, 2016). The economic impact of losses resulting from this fraud has been estimated in 1-3% of total revenues for most (59%) of the companies surveyed.

The following figure summarises some key findings from the mentioned report:

Graphic representing the fraud incidents and security incidents resulting in theft or loss of IP, prepared by Francisco Velasco (www.fvelasco.com)

Regarding the Intellectual Property (IP) business, the figure shows that 16% of enterprises has experienced Intellectual Property (IP) theft, piracy or counterfeiting fraud in 2016, which means an alarming rise in comparison to a 4% in 2015. Furthermore, 38% of companies suffered a security incident resulting in theft or loss of IP in 2016, being the manufacturing sector the most affected with 56% of the reviewed companies being subject to such incidents in the same year.

These data suggest that there is a growing challenge for enterprises on managing and protecting their intellectual property and confidential information, in order to gain (or not loose) competitive advantage. This challenge that is particularly pronounced due to the effects of global competition (the companies that lead the market are more familiar with intangible management), increased supply chains (longer supply chains make more difficult to trace the flow and use of confidential and protected information), growing hire of external consultants (external experts are more often required and and, and this represents a potential leak of information) is a common, use of open ICT systems (vulnerability toand increased job mobility.

To address this great global challenge, it is highly recommended that companies take urgent measures on conducting IP and trade secrets audits by qualified experts, to identify all intangible assets and determine which ones shall be protected and how. Such processes shall be followed by the implementation of a risk mitigation plan that enables: reconfiguring clauses in contracts with employees, customers and suppliers, defining an information access structures and protocols, prioritising and qualifying intangible assets, making an economic valuation of critical IP, implementing cyber security measures to protect computer and online systems from theft or damage, and other contingency actions to be determined depending on the type and situation of the company.

 

REFERENCES

Kroll. (2016). Global Fraud & Risk Report: Building Resilience in a Volatile World. New York, USA. Retrieved from http://www.kroll.com/en-us/global-fraud-report