Affected by the environment, geopolitics, market performance and other factors, the risk control situation of financial institutions is becoming increasingly severe. Last week, Fazzaco published an article about Milton's fraud network behind forex broker EverFX, which was revealed by a BBC investigative team.

In this context, how can financial institutions cope with the increasing popularity of online transactions, mobile transactions, and the emergence of artificial intelligence technologies earlier this year? Do they have adequate risk controls in place? On May 5, the World Health Organization declared that the COVID-19 pandemic no longer constitutes a public health emergency of international concern, which means that the world has officially entered a post-pandemic era, but in a volatile economic environment, have financial institutions put in place appropriate policies and incentives? What kinds of fraud risks will financial firms face in the coming years?

In a report on risk and economic crime, Pricewaterhousecoopers (PWC) said: "So far, although various types of risk behavior have been reduced by compliance policies, internal training and other measures, but the greater threat still lurks." The risk control line of the enterprise is still weak, especially the fraud from the outside of the enterprise has brought greater harm to the enterprise.

Industry-wide: Cybercrime poses the greatest threat vs Finance: Customer fraud poses the greatest threat

First, the PWC report shows that, industry-wide, fraud, corruption and other economic crime indicators showed a year-on-year decline from 2018 to 2022. In 2022, less than half (46%) of businesses surveyed said they had experienced some form of fraud or economic crime in the previous 24 months (2021-2022).

However, despite the continuous decline of various risk control indicators, risk events still cause huge losses for enterprises of different sizes. Fifty-two percent of companies with more than $10 billion in annual revenue reported being affected by a risk event involving more than $50 million in the past 24 months. In contrast, only 38 percent of companies with less than $100 million in annual revenue reported experiencing a risky event, and only $1 million was involved.

So what are the types of risk events? Which type poses the greatest threat?

Through the following data, we can find that the whole industry is currently facing three major risk events: cyber crime, customer fraud and asset misappropriation. We averaged the industry-wide data in the report and compared it with the financial industry data as follows (the top three risk event types in the financial industry did not include "asset misappropriation", but "improper KYC procedures").