Leaks of internal information is the greatest risk facing the life sciences sector, with a third (33%) of companies suffering a major incident over the last 12 months, according to new research from the latest Global Fraud and Risk Report released by Kroll, a division of Duff & Phelps, the global leader in risk mitigation, investigations, compliance, cyber resilience, security and incident response solutions. A similar number (31%) reported experiencing reputational damage from third-party relationships, and over a quarter (27%) reported that data theft had significantly affected their organization.
Kroll’s annual Global Fraud and Risk Report, with research conducted by Forrester Consulting, examines the current global risk landscape, understanding the biggest risks facing global companies and the steps being taken to prevent, detect and respond to daily threats.
Life sciences was the least likely sector to suffer from disruption due to sanctions, tariffs and changes in trade agreements, with only 15% stating they have experienced an issue of this type over the past year, compared to a global average of 27%. However, other geopolitical risks persist, with over half (58%) reporting being impacted by changes in economic treaties and the same amount being affected by trade wars, both above the global average (51% and 54%, respectively).
The report highlighted that the most likely perpetrators of adversarial social media activity were employees, contractors and random actors, all at 27%. Employees were also behind over a third (36%) of data theft incidents, 13% higher than the global average of 23%.
Despite this, the sector heavily relies on its employees to help detect and mitigate risks, with almost three quarters (73%) of life sciences business leaders stating that whistleblowing was an effective means to detect threats. A majority of respondents (87%) have confidence in the effectiveness of their social media monitoring for adversarial activity, demonstrating that the sector is responding to newer digital threats too.
Potentially a result of being one of the most highly-regulated sectors, life sciences places a great importance on reputational due diligence, with all respondents (100%) stating that they conducted due diligence on suppliers and business partners. That said, only 71% admitted to undertaking due diligence on investors, 13% lower than the global average (84%).
Peter Tutton, an Associate Managing Director in Kroll’s Business Intelligence & Investigations practice, comments:
“As a result of being such an at-risk sector, the life sciences industry has implemented layers and layers of regulation to help reduce its susceptibility to risk, and the figures show it is more resilient than other sectors in areas such as fraud, bribery and corruption. Significant FCPA enforcement activity in recent years has acted as a catalyst for look-back reviews of legacy activity and the implementation of more robust anti-bribery and corruption practices for firms in the industry, particularly those with business interests in higher-risk geographic locations.
“The weakest link in most organisations tends to be the human element, and this is certainly true in the case of information leaks. As the risk landscape continues to widen, life sciences firms need to ensure that steps are taken to continually assess and monitor potential threats so that issues can be detected early, before they escalate.”