While the financial crisis has forced companies to cut costs by reducing salaries or bonuses, there may be a more effective way for them to save money - fraud prevention. As the people and companies that lost mountains of money investing in scams like the one run by Bernard Madoff have shown, fraud is a growing problem in the corporate world. Consulting firm Kroll, in its annual global fraud report, has found that on the average, each firm in Asia has lost about US$6.2 million in the past three years to fraud - more cash than many spent on staff. The survey of more than 700 senior executives worldwide in more than 10 industries should be salutary reading for all business people. Of all regions, North America had the highest rate of fraud, with 32 per cent of respondents saying they had seen more fraud in their companies amid the financial crisis. In terms of the amount lost to fraud, Middle Eastern and African companies were the hardest hit, each losing an average of US$11.5 million in the past three years. The survey also found 96 per cent of companies in Greater China had experienced as least one type of fraud in the past three years. These firms felt the most vulnerable to fraud relating to vendors and suppliers, with 78 per cent of the respondents saying they could fall victims. About 70 per cent worried about theft of their information and 63 per cent about theft of physical assets. Many mainland firms are also worried about fraud perpetrated by their staff because of the high employee turnover rate. About 37 per cent of respondents in Greater China said they believed the increasing complexity of their information technology systems and push into new riskier markets had left them more exposed to fraud. Half of the Greater China respondents said they would spend more on IT security to prevent fraud, while 70 per cent would put in financial controls, audits or anti-money laundering measures. Fifty-one per cent of global respondents said the financial crisis had increased fraud cases in their firms - instead of the theft of a computer or other equipment, they are facing international financial fraud, management conflict of interest or money laundering. Tadashi Kageyama, a senior managing director and head of investigations at Kroll, said every downturn fuelled a rise in fraud, but this year it was more varied. 'The economic crisis is driving significant changes in business behaviour, which are increasing certain fraud risks and diminishing others,' Kageyama said. Investment advice The financial crisis has not only meant more fraud; it also hurt the pension funds of senior executives. In our video programme this week, AXA Hong Kong chief executive Stuart Harrison will tell why his pension portfolio had lost value in the crisis. His advice: 'Diversify your pension fund investments.'