The risks Boards are talking about: Fraud, financial crime & integrity challenges in the energy & mining sector

The energy and mining sector is no stranger to risk. Commodity price volatility, geopolitical uncertainty, regulatory change, and increasing stakeholder expectations all require careful navigation. However, alongside these challenges, another trend is emerging: fraud, financial crime, and integrity risks are receiving greater attention from Boards, Audit & Risk Committees, and executive teams than ever before.

While fraud is often associated with isolated incidents of theft or misconduct, today's risks are broader and more complex. They can arise through supply chains, capital projects, ESG reporting, cyber-enabled attacks, or third-party relationships. The consequences can extend well beyond financial loss, affecting operational performance, reputation, investor confidence, and social licence.

Below are five areas that energy and mining organisations should be discussing as part of their risk and governance agenda.

1. Bribery, corruption & third-party risk

Mining and energy companies often operate across multiple jurisdictions, engaging contractors, consultants, agents, and joint venture partners to support exploration, development, and operational activities.

While these relationships are essential, they can also create exposure to bribery, corruption, and misconduct risks. Interactions with regulators, government agencies, landholders, community representatives, and third-party intermediaries can present challenges if governance frameworks are not sufficiently robust. Industry commentary continues to identify licensing processes, government interaction, and reliance on third-party representatives as key corruption risk areas within the sector.

Questions organisations should consider include:

• Do we understand our exposure to bribery and corruption risks across jurisdictions?
• Are third-party due diligence procedures operating effectively?
• Could conflicts of interest be influencing procurement or commercial decisions?
• Are whistleblower mechanisms and reporting channels working as intended?

Strong governance over third-party relationships remains one of the most effective ways to mitigate integrity risks before they become investigations.

2. Procurement & supply chain fraud

Few sectors rely on complex supply chains to the same extent as energy and mining.

Large operational sites, major capital projects, and extensive contractor networks create opportunities for procurement fraud and misconduct, particularly where oversight is fragmented or processes are inconsistent.

Common risk areas include:

• supplier collusion
• inflated or duplicate invoices
• unauthorised contract variations
• undisclosed relationships between employees and vendors
• fictitious suppliers and shell entities.

These issues are often difficult to identify through traditional financial controls alone. Increasingly, organisations are adopting data analytics and targeted fraud risk reviews to identify unusual patterns and anomalies before they lead to material losses. Supply chain fraud continues to be recognised as a significant risk across the sector.

For organisations managing significant contractor expenditure, fraud prevention should be considered an operational discipline rather than a periodic compliance exercise.

3. ESG reporting & sustainability integrity

Environmental, social, and governance (ESG) performance has become a strategic priority across the energy and mining sector.

Investors, regulators, communities, and customers are placing greater emphasis on the accuracy and reliability of sustainability-related disclosures. This includes reporting on emissions, rehabilitation obligations, water usage, environmental impacts, safety performance, and community engagement.

As reporting requirements become more sophisticated, so do the associated risks.

In many cases, issues arise not through deliberate misrepresentation but through inconsistent data sources, weak control environments, or inadequate oversight of reporting processes. Industry observers have highlighted growing scrutiny of ESG disclosures, including concerns relating to inaccurate reporting and greenwashing risks.

Boards should ask:

• Can management demonstrate the integrity of ESG data?
• Are sustainability metrics subject to the same level of scrutiny as financial information?
• Do governance processes support transparent and reliable reporting?

As sustainability performance becomes increasingly tied to access to capital and stakeholder trust, reporting integrity is no longer solely an ESG issue — it is a business-critical risk.

4. Cyber-enabled fraud & operational disruption

The digital transformation of the energy and mining sector has delivered significant operational benefits, but it has also increased exposure to cyber-enabled fraud.

Threats are no longer confined to corporate systems. Operational technology, production environments, and critical infrastructure are increasingly being targeted by sophisticated threat actors. Recent industry analysis highlights that the energy sector remains one of the most frequently targeted industries globally for cyber-attacks and ransomware activity.

Emerging risks include:

• business email compromise
• payment redirection scams
• deepfake impersonation of executives
• vendor fraud
• ransomware attacks
• data manipulation.

The challenge for many organisations is that these attacks often exploit human behaviour and trusted relationships rather than purely technical vulnerabilities.

A robust approach requires coordination between cyber security, risk management, finance, and operational teams, supported by ongoing training and awareness programs.

5. Capital projects, asset reporting & performance pressure

Large-scale capital projects are a defining feature of the energy and mining sector.

Whether developing new assets, expanding operations, or investing in infrastructure, organisations are often managing significant expenditure, multiple stakeholders, and complex commercial arrangements.

Periods of market volatility can create pressure around:

• project performance reporting
• cost forecasting
• asset valuations and impairment assessments
• production reporting
• joint venture reporting
• commercial claims and disputes.

While most organisations have established governance frameworks, history demonstrates that significant issues often emerge when commercial pressures intersect with weak oversight or insufficient challenge.

Boards should ensure there is appropriate scrutiny of key assumptions, reporting methodologies, and project governance processes, particularly on large or strategically important investments.

Looking ahead

The risks facing energy and mining companies continue to evolve. Traditional fraud risks remain relevant, but Boards are increasingly focused on broader themes including corruption, supply chain integrity, ESG reporting, cyber-enabled threats, and large-scale project governance.

The organisations that respond most effectively will be those that view fraud and integrity risks not as isolated compliance matters, but as strategic risks requiring active oversight, strong governance, and a culture of accountability.

In a sector where trust, reputation, and operational performance are critical to long-term success, proactive management of these risks is becoming a competitive advantage rather than simply a regulatory requirement.

How SW can help

SW works with energy and mining organisations to strengthen fraud risk management, internal controls, and governance through services including fraud risk assessments, internal audit, forensic investigations, procurement and third-party risk reviews, and ESG governance advisory.

If you would like to discuss how these risks may impact your organisation, reach out to your SW advisor, or contact our Fraud & Forensics or Internal Audit specialists.

Return to Services