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How Vital Is Information Security Controls in Fraud Prevention?

Fraud prevention is one of the biggest challenges for organizations around the world. What additional measures can be considered to better prevent fraud? What role can information security play in improving fraud prevention mechanisms in your organization?

Traditionally, the term “information security” has been associated with cybersecurity and has been used as synonyms. The approach taken by organizations, suppliers and industry experts gave the impression that information security is only a technology-related cybersecurity control tool.

Getting immediate business benefits through investment in information security is rarely a priority or a topic of discussion. Ideally, it will be a theoretical analysis of the strategic alignment of information security with business. However, there was no practical effectiveness or methodology for implementation.

However, as in many areas, fraud prevention is one of the most important business challenges for which information security measures can add value.

Information security and fraud prevention

The information security community has failed to demonstrate and report effective mechanisms to prevent organizational losses due to violations other than cyberattacks. Finding an information security specialist with sufficient technical education and business acumen is the main task facing the industry.

Professionals who have been trained in corporate governance or auditing are trained in risk management. Although exceptions are mentioned, most experts have theoretical knowledge of the technology and do not understand the real technical problems. At the same time, technical experts with IT experience, but without prejudice and no preconceptions to business challenges and expectations, are at the other end of the spectrum.

The correct head of the information security service, who has technical knowledge and business acumen, will be able to choose information protection measures to solve business problems. This coordination is achieved by ensuring the adequacy and effectiveness of the control, but where possible, by linking it to the needs and ambitions of the company.

Fraud prevention is one of the direct arguments for demonstrating the value of information security to non-technical audiences, including board members.

The risks of information security and investment in cybersecurity are extremely important, especially given the current wave of hacking incidents and data leaks. But the importance of information security goes far beyond mere cybersecurity control.

When we analyze, a high percentage of fraud is associated with ineffective information security measures. This may be due to weak staff, processes, or technological controls related to valuable business data.

Example:

If a person or process turns to data or changes it when they don’t, it can lead to fraud. This violates the basic principles of information security, namely privacy, integrity or accessibility. Important security areas, such as access control and data management, are critical to preventing fraud.

Although fraud is due to many factors, the increasing use of information security controls is now much more important.

As in the past, financial institutions are more aware of this fact than others. Internal threat management initiatives, which receive broad support from enterprises, focus primarily on this aspect. Anti-fraud departments are more interested in data security measures to make fraud prevention and detection more effective and effective. Scenarios of using security surveillance to detect fraud are gaining traction among information security experts.

Basic principles or concepts

In addition to a few other scenarios, the causes of fraud may also include:

Disclosure of data to a potential fraudster (internal/external – unauthorized display) – a breach of confidentiality / influence.

Illegal data change by a potential fraudster – Violation /infringement of integrity.

Unauthorized data or services damage to potential scam, so real users can’t access them on time – Impact on accessibility

Fraud from external sources – online channels

The importance of adequate information security controls to combat fraud is growing rapidly as online channels become the fastest and most efficient service channel. While offline channels can also be a source of fraud and can be affected, fraud through online channels (including mobile) can be an incredibly simple and potentially disruptive anonymous way.

Cybercriminals target their victims through online channels because they are easier to find than by physical means. In addition, the identity of the scammer is easy to hide and extremely difficult to uncover after a successful scam. This gives real criminals a huge motivation to use online channels.

E-mail, websites and mobile apps are used to attract potential victims. With the increasing spread of mobile devices and the Internet, the chances of finding a vulnerable target for scammers are quite easy.

Fraud among the public and clients of preferred organizations, including banks, is a common trend. The probability of trusting a targeted fraudulent message (on behalf of a well-known brand) is very high. Various financial scams are committed through fake websites, emails and SMS, masquerading as leading organizations. Some messages can fool the smartest people by giving them a very real message. As a rule, it attracts victims by pre-checking biographical data using social media data.

Compromising shared email accounts of customers or partner companies can be another source of fraud due to infiltration between the vendor and the customer.

At some point, the scammer may create a fake email account that is almost like the original account, with a slight change in the spelling of the email address, and send instructions on how to transfer money to a criminal account. Many organizations fall into this trap because of a lack of sufficient process and awareness.

More and more large scammers are using data interception and cyber espionage, and experienced criminal groups are using online channels to spread malware and blackmail victims.

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