By Ryan McConnell and Matthew Boyden | March 03, 2020 at 12:00 AM | The original version of this story was published on Insurance Coverage Law Center
Companies with effective risk management processes are making preparations to address how the virus will impact their business ecosystem. But corporate leaders aren’t the only ones making preparations. Global criminal organizations continually scour the news for potential fraud schemes. Fear and confusion create a climate ripe for fraud. And global companies with deep pockets are prime targets.
Here are some potential schemes company leaders and risk management executives should prepare for.
Corporate IT systems/Electronic intrusion, compromise
Here are some examples:
- “Your office location is closed, please remote in today (see hyperlink).”
- “Because of COVID-19, payroll is making adjustments, and we need to update account information (see hyperlink).”
- “All employees are asked to sign in (see hyperlink) and update their wellness status.”
- “Relief donations are being solicited (see hyperlink).”
Sophisticated criminals may use social media platforms such as LinkedIn or Facebook to add social engineering elements to the scheme. They may know who employees are “connected” with and what type of things they post about. Enter a random employee in LinkedIn, and the site also pulls up other LinkedIn users commonly viewed by whoever looked at the employee. All of this data may be useful for fraudsters.
This effort can target victims within and outside a company, but company employees should be aware that when there are supply shortages or crises, criminal organizations will try to sell counterfeit items that at best may be ineffective, or at worst, harmful to use.
Platform consumer fraud risk
The threats to companies posed by criminal organizations have not changed in the past few decades. Criminals have responded to globalization and digitization with different schemes that leverage the tools companies use to operate (e.g., communication platforms, global financial intuitions), but the goal has always been to take as much money from corporate victims as they can. The challenge for good corporate governance and the leadership team is to educate employees on this risk and develop good governance and compliance frameworks to protect the business and its stakeholders.
For more stories like this, including how insurance coverage may apply for businesses with coronavirus-related losses, please visit our Instant Insights page, “The coronavirus and its impact.”
Ryan McConnell and Matthew Boyden are lawyers at R. McConnell Group, a compliance and investigations/criminal defense boutique law firm in Houston, Texas. McConnell and Boyden are also both former federal prosecutors with a collective experience that includes thousands of complex white-collar investigations. Send column ideas to firstname.lastname@example.org.
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