Report: Construction sector faces 2nd-highest fraud rate across all industries

By Kim Slowey | November 24, 2015



Dive Brief:

  • According to the 2015 Kroll Global Fraud Report, 75% of construction, engineering and infrastructure companies have experienced a fraud incident in the past year. The most common types of fraud experienced by respondents in the construction sector were theft of physical assets or stock (36%) and vendor, supplier or procurement fraud (24%). In 32% of surveyed firms, a senior executive or middle manager was involved in a fraud against the company.
  • The construction fraud rates were second only to the retail sector. Construction also had the highest percentage of regulatory or compliance breach fraud, 18%, of any sector. Exposure to fraud has increased for 92% of construction industry respondents in the last year – the highest increase to exposure for any sector.
  • Despite problems caused by high staff turnover, the consulting firm found that only 30% of construction companies are planning to invest in background screening in the coming year, and only 25% plan to spend on management controls – less than the survey average.


Dive Insight:

“While technology has enabled new ways to perpetrate fraud, our daily work with clients confirms what the report also reveals – that old fashioned theft, bribery and kickbacks are still amazingly effective and pervasive,” Daniel Karson, chairman of Kroll, said in a release. “Human nature being what it is, fraud will always be with us, whether it occurs in a company’s corner office or a world away in its supply chain. However, there are numerous strategies, resources and best practices available to companies that can go a long way toward helping them protect themselves and their investments.”

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