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Cyber and insider risks on the rise for UK firms

Jan 27
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Cyber and insider risks on the rise for UK firms

Insider threats - such as theft or data manipulation by malicious employees - and cyber breaches are perceived as the fastest-growing fraud risks for UK businesses, according to new research.

EY's 2016 Global Forensic Data Analytics survey sought the views of 665 executives around the world, representing industries including financial services, life sciences, manufacturing and utilities.

A substantial majority (83 per cent) of the 66 respondents in the UK identified cyber attacks and insider threats as the fastest-growing fraud risks.

This was the highest percentage of any country participating in the study.

Nearly two-thirds (65 per cent) of UK executives thought internal fraud such as submitting false travel expenses posed the second-highest risk, which was again a higher proportion than any other country.

A similar proportion (68 per cent) acknowledged that they needed to do more to improve their current anti-fraud procedures.

Discussing the findings, Paul Walker, head of forensic technology and discovery services at EY, said British firms are "facing both old and new challenges" when it comes to fraud prevention.

"It is interesting to see that the more 'low-tech' forms of fraud, such as submitting false receipts, still pose a big concern for many companies as well as the evolving threat of cybercrime, which is now an everyday reality and a relentless challenge in order to stay ahead of the hackers."

Mr Walker went on to note that more boards and senior managers are looking at advanced technology like forensic data analytics (FDA) as a "critical component" of their risk management and compliance programmes.

FDA includes technologies such as visualisation tools to show patterns in potentially suspicious activity, use of which has doubled in the past two years.

Social and web monitoring systems have also become more widely used, along with statistical analysis and data mining packages to expose fraud.

Mr Walker said the spread of these increasingly sophisticated techniques was not surprising, considering the growing pressure on businesses to improve fraud prevention.

"Surveillance monitoring programmes which use FDA can help organisations to strengthen their compliance programmes and bolster the confidence of regulators and other stakeholders," he explained.

Cyber risks - do banks need to do more?

A senior MP has responded to some of the recent technology problems reported at British banks by calling for financial institutions to take more action to secure their IT infrastructure.

Andrew Tyrie, chairman of the Treasury Committee, highlighted the issue in a letter to Andrew Bailey, deputy governor of the Bank of England and head of the Bank's Prudential Regulation Authority (PRA) supervisory arm.

He wrote that "every few months we have yet another IT failure at a major bank".

HSBC recently suffered severe disruption to its online and mobile banking services and last year experienced a tech issue that prevented some of its business customers from making payments, leaving thousands of workers without their wages.

Royal Bank of Scotland has also encountered a number of IT problems and promised to invest hundreds of millions of pounds in its computer systems.

Mr Tyrie said these "blunders and weaknesses" are affecting millions of people and causing businesses to suffer too, adding that "we can't carry on like this".

One of the main problems identified by the Treasury Committee chairman was the lack of a dedicated group with a clear responsibility for identifying risks within banks' IT systems.

"A group of this type should now be formed with the primary task of en

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