We divide fraud into internal and external fraud. By internal, you think of things like a CFO siphoning off money to his own account, employees creating fake invoices to enrich themselves, employees being blackmailed or stealing goods from the warehouse. For external fraud, you can think of 'CEO fraud', think of a fake supplier or customer who manages to extort money with fake emails. And make no mistake: technologies like deep-voice and deep-fake make fake indistinguishable from real.
Prevent
Of course, to avoid giving an opportunity, you can take measures to prevent fraud. 9 tips:
- Apply the four-eye principle to orders and payments
- Separates functions (the person who approves does not pay himself)
- Holds regular checks
- Be alert if employees start showing deviant behaviour and/or have problems (think gambling addiction, money problems, family problems, high debt, expensive lifestyle)
- Check e-mail addresses (business gmail and hotmail addresses, for example, are questionable) and make sure e-mail address does not differ slightly from standard address.
- For new customers and orders, always check contact details and verify whether the person in question also works at the company in question (LinkedIn, call, check e-mail address)
- Creditworthiness test new customer
- With no discussion on price, be extra vigilant
- Secure systems optimally (two factor authentication and change passwords regularly)
What are you insuring?
Everything tuned in, fine. Then, of course, there is still the possibility of becoming a victim. And that can mean huge losses. To cover those losses, you can get insurance. You can insure against internal fraud by (temporary) staff (think agency staff, but also interim staff, lawyers, consultants and auditors). These are staff who are less than 15% direct or indirect shareholders. For the external fraud you can insure yourself against CEO fraud, fake invoices, fake buyers, digital fraud, theft without violence (not burglary) and e-crime (think phishing and payment diversions).
What costs will be covered?
In addition to the amount of money or value of goods misappropriated, fraud insurance often covers costs of data recovery, phone hacking, the legal costs of restoring reputational damage, contractual penalties, provisional damages and preventing further damage. There is an overlap with cyber insurance. To avoid an overlap in coverages, cyber insurance and fraud insurance should be closely aligned.
Think your credit insurance covers your fraud? It usually does not. For instance, it is not insured if someone pretends to be an employee (and therefore is not really) and delivers orders from outside, has them delivered to another address and does not pay. After all, the company you have applied for cover on has neither ordered nor received goods. So what about fraudsters who set up or own a company and place an order with you? You get a credit limit, you deliver and they don't pay? Then you are insured.
Fraud is becoming increasingly common and, as a result, you are unwittingly running quite a risk. Want to know how much fraud insurance costs and what risks you can cover with it? Then contact one of Xolv's advisers.
