Fraud, the missing expense item on your balance sheet?
There are two different types of fraud in companies: internal and external fraud. As a company manager, your least likely thought is that your own employees are committing fraud. For example, small amounts of money are constantly being misappropriated, which in the long term severely damages the company. Such fraud often remains under the radar for a long time and is therefore an invisible cost to the company. These losses are also included on your balance sheet.
In the event of external fraud, the company is defrauded by someone from outside the company. An example of external fraud is CEO fraud. The name is somewhat misleading, but it boils down to fraudsters - cyber criminals - assuming the identity of an important person within a company. Under this name, they ask an employee to make an important, urgent or secret payment. In addition, a hacker can also change invoicing data within your system. This is how customers transfer the invoiced amount to the account number of the hackers without knowing it. Hackers can also change the delivery address of goods, so that the goods never arrive at your customers, but at an address known to the thieves.
Cyber thieves can strike at any time. However, they often attack on Fridays and before an extended weekend or public holiday, because banks are more difficult to contact to cancel a payment quickly.
Fraud directly affects your business results; it often concerns large sums of money. What's more, the trust built up in your company melts away and your reputation is harmed as well. Fraud insurance covers these risks. If your company becomes the victim of fraud, this insurance will intervene for all financial loss.
ADD's cyber insurance includes a section on cybercrime. This guarantee is intended for reimbursement if a hacker changes payment data or delivery address data within your systems. The cyber insurance also helps you to stop the hacking (by calling in the right IT specialists and/or supporting your own IT department), covers your liability for claims from third parties and guarantees the assistance of lawyers and other advisors.
The fraud insurance is intended to compensate for the financial losses of your company after internal fraud or external fraud to the detriment of your company, including the CEO fraud. Both insurance policies are complementary. Where the cyber insurance guarantee ends, the usefulness of a separately subscribed fraud insurance starts. And vice versa. With two insurers, ADD developed the perfect risk cover for your company.
If you have any questions, please do not hesitate to contact ADD’s fraud specialist, Paul Caekebeke.