Maximising Security and Fraud Prevention for your business
The pandemic has pushed more companies to use online services than ever before and while the pandemic recovery is well underway, the discussion of online security has only just begun. Countless businesses began implementing new technologies without considering how to secure them properly against online fraud. Now, businesses are scrambling to maximise their security and make sure that their innovative updates do not end up becoming vulnerable points of access for criminal fraud.
Is Fraud still an issue?
Quite simply, yes. Phishing e-mails - simple yet effective scams currently targeting the strapped mortgage rate market - continue to plague companies as new insidious threats emerge that are powered by AI. In the payments industry, invoice fraud, the fake invoice email scam costing UK businesses £81 million and Irish businesses €6 million [1] also continues to be the proverbial thorn for many businesses.
According to the McKinsey Institute, synthetic identity fraud is the fastest-growing form of financial crime and accounts for 85% of all fraud right now. In 2022, instances of identity fraud doubled year-over-year with 79% of forged identities using male personas. In the same year payment fraud increased by 40% and even the e-sports industry has become a major avenue for fraud, now accounting for 2.9% of all fraud cases. Thankfully, implementing optimised ID identification methods such as Know Your Business (KYB) and Know Your Customer (KYC) techniques have been shown to significantly improve a company’s ability to prevent fraud.
Obviously, preventing fraud altogether is preferable, but that is harder to guarantee in a society that is becoming more dependent on digital services by the day. As a result, many organisations have had to address the possibility of company fraud and prepare a rapid response plan to mitigate the costs or damages in the event of unavoidable fraudulent activity - especially as global fraud costs balloon to $5.4 trillion [2]. Not only that, but failure to take adequate fraud prevention measures and falling short of due diligence can result in hefty penalties which should make this a priority for every business.
Choosing the Right System for Your Business
Over 71% of businesses already plan to add improved ID verification to their anti-fraud strategies. It is important to choose a fraud prevention system that will protect your business, but it can be daunting to choose the right programme that meets your needs. Here’s how:
Step 1: Identify Security Needs
The first step is to evaluate what your business needs are for security and authentication. This can include identifying access points that may require badge scanners that allow employees access to restricted areas, or other forms of verification such as uploading documents with their ID.
Smaller enterprises that are not handling critical data should not waste resources securing information beyond what is necessary, but larger companies will need to choose a system solution that is able to verify identities on a global scale in real time and still maintain compliance.
Step 2: Determine Verification Requirements
The next step is to analyse the steps in the verification process to determine the information you will need to verify the identity of your customers or employees. If documents are sufficient then facial recognition or other complicated biometric technology is unnecessary.
Step 3: Understand Employee Behaviour
The last step is to understand the behaviour of employees across mobile and desktop devices to guide whether your strategy should be mobile-first or not. Tracking the verification process can help reveal whether the process is functioning consistently, so you can make sure you are balancing security with providing a smooth functioning work environment for your employees.
Developing a Comprehensive Strategy
A comprehensive fraud prevention strategy should include:
Automation - embracing tools like automation will be incredibly effective for monitoring massive amounts of customer or business data with algorithms that will contribute to producing more accurate predictive analytics and risk assessments in a short amount of time.
Supervision - fraud risks can be reduced by creating a strong supervisory system that conducts regular audits with checks and balances. As many as one-in-five cyber attacks [3] come from inside employees according to a survey by Carnegie Mellon.
Restrict Access - managing risks means limiting access to inventory, sensitive company information, and other valuable intellectual assets as much as possible by separating duties to reduce the possibility of exposure.
Oversee Management Overrides - executives have more power and responsibility that can be abused for fraud when it goes unchecked, and a thorough fraud prevention strategy will address this power by assigning some form of control or systematic scrutiny.
Utilise Background Checks - hiring policy should require background checks that review criminal records and possible additional credit checks, depending on the nature of the work. Background checks reduce the kind of uninformed hiring that could lead to unqualified candidates with a history of financial irresponsibility who are most likely to commit fraud.
Cybersecurity risks are only continuing to grow by day, and navigating this risk environment is challenging for businesses of all sizes - even with the help of advanced tools like automation. For businesses concerned with managing their risk and compliance services behind payment processes, consider partnering with a fintech payments specialist like Freemarket who can provide a fully automated experience with the built-in risk and compliance controls needed to protect against fraud. If you wish to find out more about Freemarket and our services, please contact us at hello@wearefreemarket.com
Robert Hackett
Head of Compliance and MLRO
Freemarket Ireland
https://www.wearefreemarket.com
