identity theft

Has the COVID-19 crisis increased the risk of fraud for companies?

For the seventh consecutive year, Euler Hermes, European leader in fraud insurance, together with the French National Association of Financial Managers and Management Control (DFCG), surveyed nearly 300 companies based in France regarding their exposure, their feelings and their preventive measures in the face of fraud and cybercrime risks.

Below you will find the results, which are fully applicable to Belgium.

  • Two out of three companies have experienced at least one fraud attempt this year, and one out of five companies have experienced more than five attacks
  • One out of four companies have experienced proven fraud this year
  • 33% of companies that were victims of fraud suffered damages greater than €10,000, with 14% suffering damages greater than €100,000
  • The COVID-19 effect: nearly one in two companies has noticed an upsurge in attacks following the expansion of teleworking

Two out of three companies surveyed report that they have been victims of at least one fraud attempt this year. The risk of frequency has not diminished either: this year, 20% of the companies surveyed have suffered at least five fraud attempts, and 13% have suffered at least 15. Fraudsters are increasing the number of attacks… and it seems to be paying off.

"28% of companies surveyed say they have suffered at least one instance of proven fraud this year. In other words, fraudsters achieve their aims about once in every four attempts. Fraudsters are not losing ground, despite protective measures taken by companies, and their professionalism continues to grow", warns Armelle Raillard, fraud insurance expert at Euler Hermes France.

Indeed, the cost of fraud also seems to be on the rise: 33% of companies that were victims of fraud this year report damages greater than €10.000. Even more worryingly, 14% of the companies surveyed reported damages greater than €100.000. This indicates that the risk of severity is increasing and that fraud and cybercrime threaten the sustainability of companies.

In another sign of the increased risk of fraud for companies, 64% of them say they noticed an increase in the phenomenon in 2020. Worse still — and proof that companies are aware of the threat — is that while the risk of fraud is already extremely high, 87% of those surveyed fear an increase in the months to come.

According to the results of the Euler Hermes - DFCG 2021 Barometer, the link is there: almost one out of two companies has indeed noticed a decided increase in the number of attacks following the expansion of teleworking. This environment may certainly seem more conducive to fraud and cybercrime, especially within a context that has pushed companies to adapt rapidly and perhaps, as a result, with less control.

Have companies taken the necessary measures to strengthen their protection against the risk of fraud in the context of the COVID-19 crisis?

"Companies appear to have adapted their protective systems in parallel with changing working conditions: 91% of those surveyed provided their employees with professional IT equipment suitable for working remotely. 66% have adapted their internal procedures to correspond to the expansion of teleworking. Finally, 67% have strengthened their security procedures to protect themselves from possible new vulnerabilities", says Philippe Guillaumie, president of the DFCG Scientific Committee.

Identity theft remains the preferred technique for fraudsters, as reported in previous editions. But a notable change has taken place this year, with CEO fraud now the most common form suffered by companies (47% of respondents). This is followed by false supplier fraud (46%), other identity theft such as banks and lawyers (38%), and false customer fraud (25%).

Among cyberattacks, intrusion into computer systems is the most frequently cited (32%), ahead of cyber extortion (21%), and theft or destruction of data (8%). While these attacks are named separately by respondents, it should be borne in mind that identity theft and cyber fraud are highly complementary.

"Three out of four companies surveyed observed an increase in phishing attempts, which involve collecting data on a user and then assuming that identity to embezzle funds. This trend reveals the combinations of techniques used by fraudsters: cyber has become a tool for social engineering, making it possible to develop extremely credible identity theft scenarios and increase the efficiency fraudsters", explains Armelle Raillard.

Data theft can also allow a fraudster to broaden his scope of action through a branching strategy. In fact, by breaking into a company's information system, the fraudster can steal strategic information about partners and add them to the list of potential targets. This hypothesis is confirmed by the conclusions of the Euler Hermes – DFCG Barometer: 57% of respondents report that their business partners have already been victims of fraud.

"Fraud should not be a taboo subject: when you are a victim, you directly expose your business partners. So you have to warn them as soon as possible. The good news is that companies are aware of this: 84% of respondents to our Barometer state that they have informed their partners after suffering an attack. Communication and transparency are essential to limit the risk of contagion", explains Armelle Raillard.

Faced with the increased risk of fraud and cybercrime, and in view of their stated fear that the trend will continue to strengthen, have companies taken the appropriate measures to protect their business and cash flow? The findings are mixed.

On the one hand, more than ten companies say they have not allocated a specific budget to fight fraud and the cyber threat. This is worrying, but understandable in the current context where companies' cost structures are under pressure. More alarming, however, is that only 44% of companies surveyed have established a risk map, down from 60% in the previous edition. And only 55% have an emergency plan to activate in the event of an attack.

customers-suppliers-important

"We recommend that companies maintain their guard and make an extra effort to increase the effectiveness of their anti-fraud systems", advises Christian Laveau, president of the DFCG Cyberfraude group.

Fortunately, corporate awareness seems to be growing: 55% of companies surveyed plan to allocate or increase their budget to fight fraud next year. The primary measures to be invested in include internal awareness (73%), information systems security audits (69%), audits to strengthen internal control procedures (47%), business recovery plans (44%), and insurance solutions (32%).

Whether the fraud is committed either internally or externally from your company, the financial losses will generally have a major impact on the company. With our fraud insurance, you will be protecting your company against financial losses incurred as a result of internal or external fraud.

In addition, we offer you the most extensive fraud insurance available on the market. It will protect your assets and cover you for losses incurred by fraud. Not only financial losses but also damage to systems and attempts to harm your company’s reputation.
 

Contact our team for a customized solution. Our advisors will be happy to help you.

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