Fraud Prevention: Critical to Cyber Security

Read any news headlines, and there’s no shortage of stories claiming cyberattacks are on the rise, and that financial fraud is rampant. And while it would be nice to chalk it up to media sensationalism, the reality is that cybersecurity threats are expanding at alarming rates. 

Recent research indicates that not only is the rate of data breaches increasing but the cost has also risen rapidly. So while these threats have become more common, when they do arise, the web of attacks affects more people and more organizations at a much higher price to be paid. 

With these types of statistics available at the ready, what are organizations to do to build their cybersecurity arsenal and protect against attacks that could not only derail their business but cost them valuable revenue?  

MAKING A BUSINESS CASE FOR FRAUD PREVENTION

Perhaps a silver lining of our current reality is that a proactive and anticipatory approach to combating cybersecurity is becoming more accepted. While in the past it was merely a line item in the IT budget, its importance has now reached the Executive and C-Suite level, given what’s at stake. 

To put it in perspective, the Association of Certified Fraud Examiners estimates that on average organizations lose 5% of their annual revenue to fraud each year. Nearly 70% of businesses report that fraud losses have increased in recent years and it is reported that losses to imposter scams will rise to 2.48 billion in 2024 just in the US alone. 

The good news? Organizations have significant capacity to manage and mitigate risks, aiming to stay ahead by reducing future fraud. Recognizing these alarming statistics, many organizations now emphasize the critical need for risk mitigation strategies, prioritizing cybersecurity.

A significant shift is underway, integrating resilience and awareness into the organizational culture at every level. By adopting essential processes and educating both teams and customers on the importance of protecting information and systems, organizations can significantly enhance the security of sensitive data across the board.

PROACTIVE PREVENTION

The bevy of tools and undertakings accessible to organizations can serve to garner feelings of helplessness and despair, as all we hear about are the rising tides of cybercrime. Yet significant fraud prevention tactics exist, and these strategies are accessible to any organization willing to put the mechanisms in place. For example, there are systems and tools that log activity, so that if a breach occurs, it is much easier to dissect where it came from, how deep it is and efficiently craft the right response.

Because exposures exist from both a human standpoint and a systems standpoint, we’re breaking down proactive measures within each sector.

Training Teams in Fraud Prevention

No matter how adequate your systems are or how much money you spend on protection, if your employees aren’t trained in how to detect, recognize, and enforce fraud protection practices… well you just might still be highly exposed. 

Here are some key measures to put into place to eliminate or at least mitigate vulnerabilities:

• Know your employees and your partners. The importance of establishing robust hiring practices that include background and credit checks along with formal interviews to determine suitability and experience has never been more critical to safeguarding an organization’s assets. The same can be said for partners, especially key vendors where money is flowing for payments and receipts. 
• Two-person sign-off for financial actions. Dual signatures and separation of duties mean that at least two sets of eyes are on every transaction, increasing the likelihood of preventing and even detecting fraud. For larger transactions, implementing measures to ensure only higher-level positions can approve or authorize serves to reinforce organization resilience. 
• Train employees on internal checks. Phishing attacks are the single most common form of cybercrime. An estimated 3.4 billion emails per day are sent by cybercriminals. However, training employees on procedures related to divulging sensitive information or transferring funds can be as simple as not authorizing any related action without a physical phone call or in-person authorization. This can include money transfers, vendor payments, change orders, and the like. 

Implementing Fraud Prevention Systems

• Employ fraud detection software. Preventing online fraud can be as simple as using the right software. With many products sophisticated enough to utilize machine learning, device fingerprinting, and identity documentation checks, using the advancements in software development to help padlock your assets has never been easier.
• Leverage machine learning. Making use of artificial intelligence is rapidly gaining traction in the fraud prevention space. Being able to teach a machine to detect irregularities and even learn about fraud to detect and prevent it is one of the most significant developments in fraud prevention in recent years. 
• Use 2-factor authentication. For organizations that are taking customer payments and accessing or even storing payment information, using secure systems and implementing 2-factor authentication to prevent fraud is critical. With privacy laws robustly expanding, organizations hold significant responsibility in safeguarding the information they are asking for, so bank-level payment systems are a must. 2- factor authentication ensures that identity is secure, given it requires at least two forms of identification in order to access resources and systems.

A LIGHT AT THE END OF THE TUNNEL

Fraud prevention is not only possible but it’s becoming much more accepted as a risk practice critical to an organization’s success. Ensuring that assets and systems are protected now and into the future can and should be integral to the corporate culture, from employees to partners to IT to systems.

And with everyone keenly aware of privacy breaches, cybercrime, and who has access to their personal information, it’s never been an easier sell. Investing now can pay dividends into the future and make the difference between survival or bust. 

If you’re looking to stay ahead of the game and prevent fraud before it happens, contact iVenture today to learn more.