White-collar crime in Germany: Assessment of the current threat situation

The threat of white-collar crime continues to intensify, and companies should remain vigilant and flexible. All details can be found in our study.

White-collar crime is at record levels in Germany. The risk posed by criminal acts and the actual impact are increasing steadily. The majority of German companies even recognise the former. However: especially for the others. The risk of in-house white-collar criminal acts is only assessed as high or very high in every third case, whereas 81 percent of the companies surveyed stated that they see a high or very high risk of white-collar crime in other companies. Specifically, with regard to the fact that the companies surveyed mostly attest to good or very good protection measures against white-collar crime, the question arises as to how this divergence between actual impact and risk assessment can be explained. Our “White-collar crime in Germany” study shows the current developments and trends.

In the recent white-collar crime study, 34 percent of companies said they had been impacted by white-collar crime. As in the previous study, there is a connection between the stated impact and the size of the companies. It is clear that larger companies more frequently report having been affected by white-collar criminal acts than small companies: For small companies, the rate of impact was 30 percent, and for large companies it was 45 percent.

Due to the often complex corporate structure, different process landscapes and sometimes uncoordinated responsibilities, perpetrators are offered a broad area of attack. The shift to remote work as a result of the COVID-19 pandemic and the associated potential security risk within the IT landscape is a factor that intensifies this. Another explanation for the greater impact on large companies is the control paradox; the more sophisticated the internal control system, the higher the number of violations detected.

The respondents were frequently affected by theft and embezzlement (39 percent) as well as fraud and breach of trust (36 percent). Nevertheless, respondents see this as a medium-sized risk.

In the current survey, the main focus of German companies is once again on protecting data and information. By far the majority (87 percent) of companies see data theft or misuse as a particularly high risk, closely followed by data breaches (78 percent). These can manifest themselves in the unauthorised access to, manipulation of or violation of the protection of (personal) data. A possible explanation is provided by the potential damage to companies caused by data crime. The damage is often in the millions due to reputational damage, fines, restoration and reprocessing efforts as well as loss of turnover.

It is therefore no surprise that more and more companies are reporting a total loss of more than €1 million as a result of white-collar crime. If it was still 10 percent in 2020, the value is now 15 percent.

It is also striking that companies are increasingly finding it harder to quantify the damage caused by white-collar crime: 26 percent state that they have no knowledge of the overall loss in monetary terms (18 percent in 2020).

As in the previous study, inattentiveness or neglect is named as the most common cause for white-collar crime. It is therefore not surprising that companies counteract this with the definition of principles of conduct and guiding principles. This measure forms a new peak value (79 percent), closely followed by the systematic collection and assessment of data or information worthy of special protection (76 percent).

Companies also rely on policy formulation and implementation and optimisation of processes and controls. Companies are taking measures in response to financial crime primarily in the form of interviews and background research (70 percent and 56 percent, respectively). It is again apparent that the majority of criminal offences are discovered by chance (50 percent), even if the detection of such deeds by the Internal Audit or Investigation departments is on the rise. (2022: 41 percent, 2020: 35 percent).

The Supply Chain Due Diligence Act (LkSG), which came into force on 1 January 2023, obligates companies to take extensive measures to prevent and respond to human rights violations and environmental breaches within the supply chain. Through monitoring, recording and adapting prevention and education measures, human rights and environmental due diligence obligations in the supply chain should be monitored.

In the first step, companies with at least 3,000 employees in Germany are included; from January 2024, this threshold value will be reduced to at least 1,000 employees in Germany.

54 percent of the companies surveyed stated that they were not yet familiar with the provisions of the LkSG. Nevertheless, almost three-quarters (73%) of companies expect the LkSG to have an impact on their own company. In particular, large companies, at 38 percent, fear perceptible reputational damage in the event of a violation. Small companies are particularly concerned about the need to adapt preventive measures (50 percent).

The vast majority (77 percent) of respondents expect this topic to continue to gain in importance in the future due to its global reach, and the establishment of effective and proper protective measures is essential here.

Some other interesting results of the study relate to

• the cost of white-collar crime,
• prevention and education measures,
• potential for improvement when dealing with white-collar crime,
• knowledge and actions regarding a company’s own supply chain.

Download our study “White-collar crime in Germany” here.