Leveraging fear for fraud
Just a few years ago, corporate fraud losses were usually seen as a standard operational cost. Now, for many corporations, it’s become a board-level issue, and with good reason: hundreds of millions are lost each year due to fraud. Sudden spikes in demand for certain goods—combined with short supply—have prompted fraudsters to pose as suppliers, enticing businesses with deals for these scarce and urgently needed items. The result: situations where companies pay for large orders of products such as microchips or certain metals and never receive them.
The social climate of anxiety, fear and panic make businesses and the people within them more likely to make irrational decisions in the heat of the moment. Fraudsters are well aware of this heightened susceptibility. They have become more innovative and sophisticated in response to this climate of opportunity, particularly towards large companies.
Know your enemy
It’s essential that businesses protect themselves from these threats, but the types of out there can be overwhelming. This makes it very important to understand the different types of business fraud out there. That way, businesses can sign up for the appropriate type of insurance and avoid spending on costly protection that is irrelevant.
There are three main fraudster types that concern businesses today:
General fraudsters, or economic fraud
Another distinct group is large criminal organisations or ransomware groups that commit fraud to finance their activities. In a ransomware scheme, criminals take control of their victims’ software system and threaten to publish their data or block access until a given sum of money is paid. They may create layers of distance between themselves and their victims by employing money mules—people who transfer or move illegally acquired money on their behalf.
Expert guidance for the right protection
While cyberfraud has become rampant and exponentially more sophisticated, the targets—businesses, governments, and other institutions—often lack innovative methods of prevention. This makes cyber and business fraud insurance one of the most important lines of defence for corporations today.
When looking for the right type of cover, companies should make sure that their insurer has a comprehensive understanding of all the types of fraud out there, and of the specific risks to the business. The goal is to keep a company protected without incurring unnecessary costs on the wrong types of insurance. That way, it can focus on doing business boldly and with peace of mind.