Data assessment inefficiencies are driving up investigation costs

In a recent global benchmark report, more than three-quarters of respondents said they had conducted an internal investigation into fraud or corruption in the previous three years, and the cost of such investigations is rising.

The second part of Kroll's 2021/22 Global Fraud and Risk Report, released Monday, polled 1,336 senior risk strategy decision-makers from 17 countries, including chief compliance officers and general counsel. In the last three years, 78 percent of respondents said their companies conducted an internal investigation, and 79 percent said investigations were more expensive.

Respondents were asked to focus on what is driving those costs in the survey. Nearly one-third of respondents (29%) thought document review and eDiscovery services were the most expensive in terms of value—"the highest of all services listed in our research," according to the report.

Computer forensics (24 percent), forensic accounting (19 percent), open-source research (16 percent), and witness interviews were among the other investigative services respondents thought were overpriced compared to their value (11 percent).

"Increasingly global operations, complex supply chains, huge data sets, data governance consider

ations, and a variety of internal and external stakeholders to coordinate," according to the report, contribute to an investigation process that "can be laborious, inefficient, and costly."

According to the survey, computer forensics/eDiscovery firms (55 percent), investigations firms (47 percent), accountancy firms (45 percent), and law firms were the most frequently hired to conduct or assist internal corporate investigations (42 percent).

In September 2021, Kroll released the first part of its Global Fraud and Risk Report, which found that risk leaders in China and the United States had the highest level of confidence in their approach to bribery and corruption risk mitigation.

According to Kroll, the first report also discussed measures taken by companies to prevent and detect bribery and corruption, such as proactive data analytics and enterprise-wide risk assessments. However, the fact that 82 percent of respondents said their companies were still experiencing significant fraud or other misconduct "suggests organizations are not harnessing the true potential of proactive data analytics to mitigate risk," according to the report.

"Data analytics is a broadly used term, with many firms only scratching the surface of its true potential," according to the report. "Given the range of data, tools, and techniques available, a key component of leveraging data analytics effectively is to take a holistic approach to data governance. Organizations that plan ahead and get their arms around where their critical data resides are in a far stronger position when faced with an investigation."

According to the report, companies with good data governance—the way they collect and review data—can "hit the ground running when planning an internal investigation" and "reduces costs associated with compliance, investigation, and downstream litigation."

By fLEXI tEAM