Financial services companies are more prone to fraud than the businesses in any other industry. According to the latest KPMG survey of fraud, bribery and corruption in Australia and New Zealand, financial institutions accounted for 86 per cent of fraud incidents in 2012.To make matters worse, more senior executives and company directors have been involved in fraudulent activities.  Frauds involving this group have more than doubled since 2006.When senior executives are involved the losses are much higher. In financial services, management was responsible for nine per cent of incidents last year, but 22 per cent of the value of frauds.KPMG's survey, which was released yesterday, is based on responses from 281 organisations.KPMG found that large companies are more exposed than small ones. Eighty-three per cent of total fraud reported between 1997 and 2012 occurred in organisations with more than 1000 employees.Its view is that the complexity of larger organisations makes them vulnerable to fraud. At the other end of the scale, only nine per cent of companies with fewer than 100 employees reported that they had experienced fraud. In total, 43 per cent of respondents said they had been victims of fraud. The average loss was $3.1 million. The cost of fraud has tripled since KPMG started its survey in 1997.Most perpetrators (53 per cent) work in the organisation. While most acted alone, companies said they were seeing more fraud cases involving two or more people. Major frauds often involve collusion with outside parties.Most fraudsters have no history of dishonesty. Most are above-average earners and are motivated by greed or personal financial pressure.Men are three times more likely to commit fraud than women. There has been a significant increase in the number of fraudsters aged over 55. KPMG said this may simply reflect Australia's changing demographic profile.Most fraudsters target cash. And theft of cash is the type of fraud in 84 per cent of cases. Other common frauds in financial institutions are false invoicing and credit card fraud (in the case of external parties).KPMG said managers should look for the following red flags: financial information that is inconsistent with key performance indicators; lack of supporting documentation for transactions; failure to reconcile cash or stock; requests for systems' access not commensurate with the person's role; not taking holidays; unusually close relationships with particular customers or suppliers; and failure to declare conflicts of interest or gifts.One bit of good news for financial institutions is that they are less likely to be targets than they were two years ago. In 2010, they accounted for 93 per cent of fraud compared with 86 per cent last year.