Insight

The heightened risk of fraud during lockdown

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“Hacking attacks against corporations double as employees work from home” – Insurance Journal 17th April 2020.  


 
It is the sad truth that scammers and cyber criminals have taken the opportunity to look for weaknesses in working from home protocols to target businesses. A common problem is the increased risks of VPN systems which many businesses are using at this time.
 
Additionally, with fear levels heightened for individuals, many speculate that elderly people are particularly vulnerable and indeed susceptible to scams at this time. 
 
To this end the FCA have produced some guidance which highlights the types of scams taking place which you can read on their website (this was first published 26th March 2020 but has been regularly updated since).  
 

What can you do reduce the risks to your business and clients?

 Check your company processes are understood by clients
Now more than ever, we recommend that you take every opportunity to remind your clients what your processes are. You may want to increase the checking process around money transfers in particular; for example a number of the large Property Conveyancing Solicitors will contact clients by phone or text as a final check before the transfer.  
 

Remind employees of potential data breaches

There is a concern that breaching General Data Protection Regulations (GDPR) is easier during lockdown. This is because although many firms have had well-established working from home protocols, employees have been tempted to find workarounds to IT safety restrictions. One example of this involves employees sending information to personal emails in order to use their home printer. Clearly this could lead to vulnerabilities with data protection and therefore organisations need to communicate with employees about what is and what isn’t permitted. If there are common workarounds being adopted then try to offer safer alternatives.
 
It may be also appropriate to remind your employees about the importance of encrypting outgoing emails which contain sensitive personal data. Without doing this the data is exposed to hackers.


Remain aware of internal risks

There is no easy way to say this but firms should consider whether this way of working gives rise to an opportunity for their own employees to commit fraud – never a welcome conversation but having seen the claims over many years we can tell you that these things do happen! 
 
To combat risks posed by employees, ensure that your own internal checking processes remain strong. Think carefully about what you can no longer ascertain when you cannot see your colleagues face-to-face and whether this might create any weaknesses.
 

Eliminate the need for ‘wet ink’ signatures

We understand that many advisers were struggling with outdated processes used by some of the large product providers, particularly where documentation required ‘wet ink’ signatures. Hopefully these problems have now passed as clearly these traditional processes are more susceptible to fraud.  Do check with us or your Broker if you have had to adopt any unusual working practices to ‘get things done’ so that we can have Insurers note this information.  
 
As an aside, when dealing with transactions which you know may take a little longer, do warn your clients. We have found a lot of cases in the past where a transaction has been delayed and it is uncanny how many times this has meant markets have moved against the client and they have been disadvantaged.  
 

What should you do if you think your business has been a victim of cyber-crime?

The FCA has provided full details around cyber-crime reporting on their website. If you currently buy a cyber protection insurance policy then that policy has access to immediate assistance from third party professionals built into the policy response. If you don’t it might be a good time to consider what this would add to the protection of your business.
 

Chris Davies

Chris' team of expert brokers specialises in Professional Indemnity for Financial Advisers, Accountants, and Insurance Brokers. They always work hard to get their clients the right cover for the right price. And Chris' deep understanding of risk management means that he can help clients mitigate their risks as well as insuring against them.