How to approach risk management in the age of security breaches and fraud

Data security and protections specifically for financial systems have been a top priority at companies around the globe. And when one looks to the statistics pertaining to data breaches and fraud, it isn’t difficult to understand why.

After all, if a malicious actor or insider threat exposes private data, or leverages company financial information to commit fraudulent activity, the brand’s reputation – and its ability to attract and serve new customers moving forward – is at serious risk. And in the current environment, where instances of security breaches and fraud are on the rise, enterprises and businesses large and small simply cannot be too careful.

Growing rates of breach and fraud

It’s an unfortunate fact that data breaches and fraudulent activity are on the rise within companies in nearly every industry. Particularly, though, hackers and malicious attackers tend to go for financial systems and information in an attempt to exploit monetary channels and make off with ill-gotten profits.

In fact, according to PwC’s 2020 Global Economic Crime and Fraud survey, “Fighting fraud: A never-ending battle,” nearly half of the 5,000 companies surveyed — 47% overall — reported that they’d been victims of fraud within the past two years. This percentage of victimized companies marked the second highest level of fraudulent incidents within the past 20 years, and the resulting losses totaled an alarming $42 billion.

The top types of fraud incurred by businesses in the last 24 months included incidents like customer fraud, cybercrime, asset misappropriation and bribery and corruption. Within the financial services sector specifically, 15% of companies experienced cybercrime, and 14% reported accounting or financial statement fraud.

But the risks don’t end here — according to data gathered by cybersecurity firm Varonis, hackers now attack companies more than 2,000 times a day, or once every 39 seconds. Security breaches have risen 11% in the last two years, and the majority of these attacks — 71% in total — were financially motivated.

Tips and best practices for risk management

In this type of data security landscape, it’s critical for IT, financial and accounting teams to perform their due diligence and ensure their assets and systems are properly secured. There are a few efforts and best practices to incorporate with risk management, including the following steps:

1. Establish a risk management strategy or framework. As Varonis pointed out, a risk management framework lays out all the processes and procedures the business uses to identify, monitor, assess and mitigate risks. Putting in place such a framework helps ensure that all security stakeholders in the organization are on the same page, and are aware of their specific responsibilities as part of the risk management strategy.
2. Identify the potential risks that could impact the business. As part of the risk management strategy, stakeholders, including IT and security experts, should take the time to consider the data protection or fraud risks that could impact the business. For instance, these might include things like a lack of robust security measures on certain systems, or processes that haven’t been updated according to industry compliance standards. Pinpointing these risks helps ensure that security issues don’t fly under the radar, and provides the opportunity for the company to address and mitigate these gaps.
3. Review and learn from past security incidents. In the current environment, one would be hard-pressed to find an organization that had never experienced a security issue. Besides examining the potential future risks that could impact the business, it’s also helpful to examine and analyze any previous breaches or fraud incidents that have taken place in the past. These events could offer valuable learning experiences and help highlight further measures the business can take to better secure its assets.
4. Deploy strong security solutions. Technology solutions that help specifically target security breaches and fraud can represent the business’s best line of defense against these types of risks. It’s important to find solutions that are capable of integrating with the company’s existing infrastructure platforms and are compliant with key standards like PCI DSS.

SK Global’s Treasury Automation Suite includes specific risk management features, including additional layers of security and fully unattended and secure file transfers. These capabilities, alongside other features like a direct digital channel to the bank, help ensure that files and data are fully protected and safeguarded against internal and external threats.

Check out our website to learn more, and connect with us at SK Global Software today to schedule a demo.