Fraudulent instruction massive new cyber threat

Incidents of cyber-scammers misdirecting corporate funds quadrupled last year. Are you next?

Fraudulent instruction massive new cyber threat

Risk Management News

By Lucy Hook

Organisations are facing an increased threat to their operations from what specialist cyber insurer Beazley calls ‘fraudulent instruction scams’ – incidents where cyber criminals trick accounts departments into transferring funds to bogus accounts.

Claims data recorded by the insurer shows that fraudulent instruction incidents quadrupled in 2017 – policy holders incurred losses up to US$3m.

With claim amounts in 2017 averaging $352,000, Beazley described the scam as having “rapidly become a significant financial threat to many organisations.”

Fraudulent instruction scams see criminals use hacking and phishing techniques to accumulate information that allows them to send plausible-looking requests to transfer funds to bogus accounts, the insurer said today. In addition to losing money, organisations may also have to conduct exhaustive systems analysis to ensure that individuals’ personal and private data has not been compromised.

“Cyber-criminals are finding new ways of getting organisations to part with their hard-earned cash,” Katherine Keefe, global head of Beazley Breach Response Services, said. “In 2017 we saw fraudulent instruction emerge as a new trend which offers significant reward for the perpetrators in return for little effort, but brings potentially devastating financial consequences for the victim.”

The top three industry sectors affected last year were professional services, financial services and retail, which experienced 22%, 21% and 12% respectively of the total incidents reported to Beazley.

However, the insurer warned that incidents are growing across all sectors, and in particular where single, large transactions, such as real-estate purchases, are involved.

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