Organizations are under siege by bad actors across the globe who are determined to rip them off. But new software that verifies the ownership of a bank account can help businesses mitigate their risk.
Threats to information security top the list of operations risk, a new survey by Risk.com finds.
Cyber risk – in one form or another – has dominated the top 10 operations risk concerns since Risk.com started the survey nearly 15 years ago. But the events in Russia and Ukraine, high-profile hacks and ransomware attacks, and the never-ending line of new threats, tactics and hardware for perpetrating fraud have heightened fears among operations risk managers surveyed by Risk.com.
What Is Business Email Compromise?
Business email compromise (BEC) attacks are a cyber risk for organizations.
BEC attacks are one of the fastest-growing types of payment fraud. In these schemes, bad actors use email to impersonate legitimate vendors, suppliers or employees of a company to convince the recipient to make a payment or wire transfer to an account they control. In some cases, bad actors may even gain access to a company’s email system and send fraudulent payment requests to other employees or vendors. Unfortunately, without the proper safeguards, it’s easy to fall victim to BEC attacks.
Eighty-eight percent of organizations worldwide experienced BEC attacks in 2020, according to a survey conducted by Proofpoint, a cybersecurity and compliance company. Ominously, 86 percent of organizations surveyed by Proofpoint reported that the frequency of BEC attacks has increased. And one-third of respondents admitted that their organization lost money due to BEC attacks.
The Association of Certified Fraud Examiners (ACFE) warns that BEC is now the most common fraud.
According to the FBI’s Internet Crime Complaint Center (IC3), the total losses reported from BEC and Email Account Compromise (EAC) in 2020 reached $1.8 billion in the United States. But the FBI warns that those losses are likely understated as not all incidents of fraud are reported.
How to Reduce Cyber Risk
Against this backdrop, it’s no surprise that risk managers say that obtaining coverage against risk is more difficult these days. Some risk managers note that the cost of underwriting has increased fivefold.
As a result, risk managers are taking preventative steps to decrease their firm’s exposure.
Many organizations are beefing up their email security protocols, conducting regular employee training on cybersecurity best practices and deploying advanced technologies to detect BEC attacks.
But one of the most effective tools in thwarting cyber risks, such as BEC and EAC attacks, is for businesses to automate the process of validating bank account details provided by suppliers.
Bank account ownership verification software enables businesses to verify the ownership of bank accounts before making payments. Leading self-service supplier portals offer bank account validation as a built-in component. The software compares the name on the account and other identifying information provided by the supplier with the information on file with the bank.
Validating bank account ownership can reduce the risk of payment fraud by preventing fraudulent transactions from being processed. For example, the verification software can detect discrepancies between the name and identifying information provided and the information on file with the bank.
Cyber risks show no signs of receding.
But bank account verification software can help reduce the risk by providing an additional layer of security and helping to ensure that you only pay legitimate account holders.
VendorInfo can handle verification of vendor bank account ownership for your organization. Contact us.