CIOs need to address fraud issues with better security
For the last three years it has been reported that estimated fraud losses that are doubling each year. The fraud prevention market is braced for a repetition of this trend with an increase in the estimate of fraud losses expected again.
Cyber crime attacks – The daily number of automated attacks on bank and retailer systems runs into the millions. Corporations are especially vulnerable where they have ventured into online trading, as the customers are faceless and there is comparatively little time to check the efficacy of the client’s details. Controls over applications, such as payments through mobile and NFC (Near Field Communication) devices are also on-going risks that are growing as these solutions evolve. Technically skilled fraudsters and self-styled cyber-warriors’ love such conditions and it is a constant race for switched on payment processors to find the ‘security holes’ before such people actually cause havoc.
Social and other media related risks – The huge rise in different types of mobile device platforms along with the corresponding growth of social media sites now poses a huge reputation challenge for corporations. Many CIOs are making a start by attempting to formally control how their own employees release company or workplace information through social media. The number of reported dismissals and legal cases for acting irresponsibly through social media is soaring.
Silo mentality – Based on the desire to conduct business correctly, increasingly complicated silo structures have grown up in the corporate world, with the corporate tsars of compliance vying for power with those running policy, risk and traditional management functions such as IT and finance. It is possible that key decisions such as fraud policy, for example, will fall between these silos so that one either finds managers that are only partially responsible for an issue or a whole gaggle of managers who all feel that something is ‘their bag’. The only solution is to have cross-function internal teams working closely with non-execs to allocate and refine roles and responsibilities.
Big data risks – As a result of corporate compliance and customer contact drives, organizations now hold increasingly huge volumes of data such as customer files. This development does pose its own data breach risks. CIOs can now monitor hundreds of millions of transactions continuously for patterns of potential fraud, cyber-attacks or money laundering. Often this is happening at speeds many times faster than even a year ago.
Legal claims – Whenever there is a downturn in the economy, people seek-out legal redress from anywhere that they can find it. Many CIOs seriously underestimate how big the potential legal risks can be. They are likely to face even greater pressure on this front though in 2013, as the TV ad style accident and PPI lawyers start to look for the next big thing.
Environmental, CSR and sustainability risks – Often the investment in environmentally friendly and wider social responsibility issues and other sustainability initiatives will be finely calculated parts of a wider corporate score-card. In more difficult economic times, these broader social and green initiatives suffer; the financial commitment made in the good times can also damage the longer-term investment, security and stability of businesses when things are tighter. So there is a longer term balancing of the risks required – i.e. the corporate social responsibility commitments flagged on the company’s website need to be measured against the real-life, long-term trading conditions. As reputation ‘can be all’, corporates need to make sure that long-term CSR commitments aren’t ultimately suspended or frozen with the risk of damaging their hard won reputations.