Many business owners take measures to prevent fraud. These include the four-eye principle, system security such as firewalls, or training to promote staff awareness. Nevertheless, we find that business owners are misjudging the risk of fraud, especially now that technology is enabling entirely new forms of scam (deep fake or deep voice).

"Business owners have a lot on their plate these days. Supply problems, energy problems, staff shortages, inflation, you name it. And on top of that is the fear that fraud will increase with the emergence of new technologies and become more difficult to prevent," says Richard van Essen, Fraud Sales Manager at Allianz Trade.

"A fraud insurance policy will absorb the financial losses, in any case, but you'd rather not let it come to that." Richard van Essen shares his practical experience. "What often happens is that criminals place an order on behalf of another company. For example, they claim that their regular supplier is unable to deliver. This has been an issue in recent years. They are looking for another supplier. This is music to the ears of any business owner. Checks are often carried out, but criminals are becoming increasingly sophisticated. The reality is that the order is accepted and delivery takes place. Usually, the delivery address is changed at the last minute. The criminals may even have rented a warehouse in the same street or around the corner to have the items delivered there. Sometimes they stand in the street to guide the truck that way with some excuse."

"And in the end, of course, the invoice is never paid." According to Richard van Essen, the email traffic surrounding the order will look extremely reliable. "There are minor discrepancies only in the tiniest details. You should really look out for that. Sometimes the email will actually be sent in the name of a business connection, after a computer break-in."

"Of course, it's important for business owners to know what techniques are commonly used by 'professional criminals', but they shouldn't forget that most fraud is still committed by their own employees. These employees divert money or goods. The accountant' may keep a shadow administration and systematically enrich himself." Managing directors tend to think it will not happen to them and that their own people are trustworthy.
According to Richard van Essen, the human factor is the crucial link in fraud prevention. "Problems at home can put employees under pressure, leading to the temptation to commit fraud. They may be employees who live beyond their means, are addicted to gambling or have large debts. Sometimes it can happen that employees are frustrated and feel they are entitled to the money because they work hard and earn so much for the business, but don't feel sufficiently valued or rewarded."
"A criminal pretending to be someone else: this is the common thread. For example, the criminal sends an email in the name of the director or manager with an order for payment. The internal email looks completely reliable and the tone is perfect. This development is ongoing. The fear is that deep voice and deep fake will take off. The voice you hear from the director on the phone is fake, but sounds real. Or take a video call. The person you see on the screen has been imitated by a computer program. These are, of course, very worrying developments. Crime is always one step ahead, so as a company you quickly find yourself falling behind."

Richard van Essen explains the difference between fraud insurance and cyber insurance. "In practice, business owners with cyber insurance believe they are insured against digital forms of fraud, where a criminal impersonates someone else. It's only in exceptional or very limited circumstances that this type of fraud is covered by cyber insurance."

"Cyber insurance covers other specifics, such as the damage caused if your system is shut down by criminals. They release the computer system only after you pay the ransom. Or consider data files that are exposed through a hack. This is usually covered by cyber insurance. For false orders, false invoices (fake supplier, fake buyer, etc.) or fraud committed by your own staff, you need adequate fraud insurance in addition to cyber insurance."

Allianz Trade is active in the area of fraud insurance in Europe for many years. "We're seeing that many fraud insurers in the market no longer wish to insure against fraud risk. They seem apprehensive about a wave of fraud that appears to be coming our way as a result of new technologies. As part of the Allianz group, Allianz Trade is a solid partner with extensive knowledge of the latest developments in fraud."

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