Cyber Fraud Alliance: The power of cyber security and fraud prevention
18 December 2023
As technology evolves so too does the opportunity for fraud. Financial crime poses an increasingly sophisticated and persistent threat to operations and reputation. This has placed immense pressure on businesses to ensure that fraud prevention and detection measures remain effective and are supported by strong cyber security processes.
The factors driving cyber criminals to fraud
As Willie Sutton, the bank robber, said when asked why he robbed banks, “That’s where the money is.” Cyber criminals think the same. They pursue financial gain through business fraud, data theft, and insider trading. Criminals scam companies, steal sensitive customer information and intellectual property, and then use or sell this information on for identity theft purposes or competitive advantage. Cyber criminals also engage in market manipulation using confidential information, and increasingly steal credentials for unauthorised transactions. This underscores the importance of robust cyber security and fraud prevention measures operating in tandem to combat fraud.
How can you protect your business from cyber fraud?
Fraud mitigation requires a comprehensive approach and involves fostering vigilance throughout the organisation via communication, continuous education, and awareness. Creating a strong fraud detection and cyber security protection framework is key to reducing external and internal fraud risks, either by preventing them or quickly detecting them. Using different expertise across your organisation can greatly improve fraud prevention. For instance:
Executives set the ‘tone from the top’ on the importance of fraud prevention and are vital for implementing effective strategies.
Human Resources teams are key in enforcing policies, conducting background checks, and introducing training on fraud recognition and prevention.
Legal teams provide advice on the legal aspects of fraud and assist in developing compliant policies.
Audit, compliance, and risk management teams ensure adherence to laws and standards, assess and mitigate fraud risks, and review internal processes.
Finance and accounting departments are trained to monitor transactions for irregularities, and implement controls to prevent embezzlement and financial fraud.
Information Security teams are instrumental in detecting and preventing cyber fraud, through the implementation of technical controls, conducting security audits, and defending against cyber threats.
IT/OT Departments collaborate with Information Security to ensure system updates and security controls are implemented, and manage access to enforce security policies.
How can you safeguard sensitive data from fraudulent use?
There are many mechanisms that can be deployed to prevent sensitive data from falling into the hands of malicious actors. Applying best practices, such as the ones set out below, will deter and reduce instances of fraud:
Pre-employment screening: Organisations must place a level of trust in their employees—providing them with access to confidential information and valuable data. Ensuring that you have hired the right people is key to ensuring this trust is not misplaced. A comprehensive pre-employment screening process will ensure that your business is less vulnerable to negative financial and culture risks.
Educate employees and customers: Ongoing education on fraud tactics, phishing, extortion, and social engineering will significantly reduce the potential of fraud risk. Such training enhances the ability of employees and customers to recognise and report these threats, thereby mitigating human error in fraud incidents.
Secure sensitive data: Fraudsters often target sensitive data like personal, financial, and customer information. To protect this data, understand where and why your data is being stored and use encryption for data at rest and in transit. Strengthen access controls and authorisation procedures to prevent unauthorised access. A robust cyber security strategy will ensure data encryption, secure storage, and access only for authorised persons, reducing data breaches and deterring fraudulent activity.
Implement Multi-Factor Authentication: Multi-factor authentication (MFA) is an effective anti-fraud tool that requires multiple verification forms like passwords and one-time passcodes. This adds an additional security layer against unauthorised access through stolen credentials, protecting sensitive information and preventing market manipulation.
Detect anomalies and suspicious activity: Advanced cyber security systems use Artificial Intelligence (AI) and Machine Learning (ML) to monitor user behaviour, network traffic, and transaction patterns, quickly detecting anomalies and potential fraud. Timely identification will enable your organisation to act fast, preventing significant damage from fraudulent activities.
Regular security assessments and audits: Identify vulnerabilities in your organisation's systems and processes through regular security assessments and auditing. Proactively addressing weaknesses will help to prevent fraud and strengthen defences against cyber threats. External audits by independent experts also offers valuable insights to enhance security measures.
Secure payment processing: Online transactions and payment systems are prime targets for fraud. By implementing frameworks such as PCI-DSS, secure payment gateways, and encryption protocols, your organisation’s transactions can be protected from interception and unauthorised access. Verifying large orders or requests from new or unusual sources will prevent financial fraud and enhance customer confidence in your organisation’s ability to protect sensitive financial information.
Businesses must invest in robust fraud prevention systems, ongoing surveillance, and staff education to combat cyber fraud. All parts of a business can play a key role in preventing fraud—from executives setting the ‘tone from the top’ through to the implementation of clear policies, legal procedures and technical controls.
In the year ahead, as cyber criminals employ increasingly sophisticated methods for financial gain, and as changing economic conditions create a new ground for opportunistic crime, robust cyber and fraud countermeasures will be even more critical.