NU Online News Service Oct. 19, 3:55 p.m. EDT

Theft of information and electronic data at global companies hasovertaken physical theft for the first time, but most losses aresmaller, spanning months and even years, according to an annualfraud survey.

While this may appear to be good news, the frequent repetitionof small losses can create a significant problem in aggregate,according to the Kroll AnnualGlobal Fraud Report. The survey found that the amount lost bybusinesses to fraud rose from $1.4 million to $1.7 million perbillion dollars of sales in the past 12 months--an increase of morethan 20 percent.

The report, commissioned by Kroll with the EconomistIntelligence Unit, surveyed more than 800 senior executivesworldwide. Nearly a third (29 percent) of the respondents werebased in North America; 25 percent in Europe; just under a quarterfrom Asia-Pacific region; and 11 percent each from Latin America,the Middle East and Africa.

While physical theft of cash, assets and inventory has been themost widespread fraud by a considerable margin in previous reports,this year, theft of information or data was reported by 27.3percent of companies over the past 12 months--up from 18 percent in2009. In contrast, reported incidences of theft of physical assetsor stock declined slightly from 28 percent in 2009 to 27.2 percentin 2010, Kroll said.

According to the 2010 survey, 88 percent of companies said theyhad been victimized by at least one type of fraud during the pastyear. Of the countries analyzed, China is the top market in whichcompanies suffered fraud, with 98 percent of businesses operatingthere affected. Colombia ranked second with a 94 percent incidenceof fraud in 2010, followed by Brazil with 90 percent.

According to the survey, information-based industries reportedthe highest incidence of theft of information and electronic dataover the past 12 months.

These include:

? Financial services (42 percent in 2010 versus 24 percent in2009)

? Professional services (40 percent in 2010 versus 27 percent in2009)

? Technology, media and telecoms (37 percent in 2010 versus 29percent in 2009)

Robert Brenner, vice president of Kroll's Americas region, saidin a statement: "Theft of confidential information is on the risebecause data is increasingly portable and perpetrators--oftendeparting or disgruntled employees--can remove it with ease absentsufficient controls. At the same time, there is a growing awarenessamong thieves of the increasing intrinsic value of anorganization's intellectual property."

He added, "Companies need to regularly evaluate how they arecontrolling access to information within their organization toensure they are keeping pace with technological advancement and theimperative for collaboration in the workplace."

Richard Plansky, a managing director with Kroll and head of thefirm's New York office, told NU Online News Service in an e-mailthat companies are spending less on the information theft risk."Technology is a double-edged sword," he wrote. "Businesses tend tosee the upside first--technology makes them more efficient andencourages collaboration across the company, among teams and withpartners. The downside is that it also makes critical informationmore easily available to potential fraudsters. There is a growingawareness of this risk, but investment in IT security is stilllagging behind it."

Mr. Plansky noted that in Kroll's experience, "not enoughattention has been paid to the risk of data theft and loss, a factwhich is reflected in our survey data--77 percent of respondentsbelieve that their companies are vulnerable to informationtheft."

Despite the increased risks, however, only 48 percent ofcompanies are planning to spend more on information security in thenext 12 months, down from 51 percent last year.