There is a common belief that identity fraud is a victimless crime, or has little business impact. International Fraud Awareness Week in November highlighted how far from the truth this is. The financial losses are one factor. However, the damage to business reputation can threaten the future viability of a business or at least impact on immediate turnover and staff morale.
Identity fraud is not a crime confined to individuals. In 2014, global research resource, LexisNexis found that for every actual dollar a business loses to fraud, an additional US$2.08 is lost. This total fraud loss of US$3.08 reflects legal and cybersecurity expenses, untimely reconciliation of accounts and disruptions to daily business operations.
The damage to business reputation can sometimes be fatal. Loss of earnings accrued during the time taken to deal with the fraud may be irrecoverable. For the self-employed, fraud can result in a loss of employment or, at the very least, a loss of business.
Some positive steps can be taken to reduce risk. Criminals can impersonate a business using its name, tax file number or even the owner’s personal identity information. Secure data by protecting online information, watching for cybersecurity threats and reviewing tax records and credit reports for signs of misuse. Even actions such as shredding documents containing personal and sensitive information are a simple but effective measure.
Security experts warn that hackers prefer small to mid-sized organisations, with these accounting for two-thirds of cyber-attacks in 2014. Without the sophisticated cyber-security technology and big budgets of large business, they are easy picking. However, any size business can manage their exposure to cyber-crime: encrypt all sensitive information stored, restrict physical access to devices, instruct employees not to connect to public Wi-Fi and ensure software is routinely updated.
Confidential information is valuable. The same care protocols apply as with any other valuable possession. Sensitive information exposes businesses and consumers to the risks of identity fraud. The impact of this crime hits the bottom line as well as a valuable intangible asset, business reputation. The implementation of some basic precautions makes good business sense.