Overseas markets pose emerging risks
For the first time, major international corporations are reporting higher fraud losses from electronic theft of data than from physical stealing of assets, cash and inventory. With 98 percent of businesses affected, China appears to have the highest level of fraud followed by Colombia with 94 percent and Brazil at 90 percent.
A study performed in 2010 showed that the amount lost by businesses to electronic fraud rose from $1.4 billion to $1.7 billion over the previous year. Inside jobs made up the majority of fraud losses carried out by company employees.
“How much fraud there is depends more on opportunity than anything else,” said Tommy Helsby, Kroll’s European chairman. “Much more work is done electronically, and that creates new opportunities for fraud. It takes time for companies to catch up with that. These can be simple thefts or the risk of damage to your company’s reputation, which itself can be an existential threat to your business.
Many companies are discouraged from expanding in some crucial emerging markets, China, Africa, and Latin America due to their suspicions over fraud.
Which means you miss out on some of the fastest growing markets, according to Helsby. “You can’t make the risk go away, but you can manage it through having the right systems in place.”
With fraud losses at an all-time high, Cyber Liability insurance is a critical part of the risk management plan of any major corporation.
Source: Insurance Journal