Trojans are planted into networks of target companies, stealing passwords to various online services such as fund management and online banking.  This opens up ACH or Automatic Clearing House Network Fraud where hackers wire money from the victim’s accounts and into the accounts of money “mules” that launder the money for a profit.  Criminal masterminds positioned in other countries such as China and Russia receive the funds since they are out of the reach of US law enforcement.    

The small and midsized businesses are favored because hackers know they often lack the time and money to put stringent security controls in place.  Even though this may be true there are ways to protect your business and yourself.  Educate your employee’s about the risk and instruct them in basic security awareness.  Also, use network security procedures such as web and mail filtering solutions, network firewalls, and antivirus software.

Source: US Federal Bureau of Investigation

Here are some eye opening facts:

• According to a 2008 survey by Computer Security Institute, the average financial loss due to computer fraud was $289,000.  The average loss due to funds transfer fraud was $500,000.
• Pfishing scams, Trojan horses, key loggers and other techniques allow hackers to gain control of online banking transactions and to circumvent normal online authentication controls.
• Internal controls such as antivirus, firewalls, and employee training are critical, but not enough for 100% protection. 
• Specialized Financial Insurance coverages should be purchased to protect against this risk.

Electronic Funds Transfer Fraud Claim Examples:

• The bank of a victim company allegedly sent a letter explaining a new security program.  The company received the email that appeared to be from the bank and an employee opened the email.  Opening the email allowed a Trojan horse virus access, which read keystrokes from the company’s computer, thereby allowing the perpetrator to obtain banking and password information.  A fraudulent electronic wire transfer was initiated and the company lost $683,000.  
• Finance director of a company opened an attached zip file in an email that contained a virus.  The user ID and password to the company’s account with its bank was obtained through code inserted by the virus.  A fraudulent electronic wire transfer totaling $147,000 was initiated by criminals from the company’s bank account to an unknown bank account in Arizona.   The immediate withdrawal was unrecoverable. 
• Payroll supervisor logged on to the payroll account for the company and noted that three payments totaling $704,632 had been wired from the account. The transactions were reported to the bank as unauthorized and the account was shut down.  Unfortunately, $238,781 was not recovered. 

Computer Fraud Claim Examples:

• An employee of a customer of a company hacked into the company’s website and changed the bank routing and account numbers to her own.  When the company paid her employer for services rendered, she fraudulently received the funds in her account. 
• A former employee used his supervisor’s password to enter the insured’s unlocked building and gained access to use the supervisor’s computer.  Using his bank routing number, he activated transactions to receive fake reimbursements allegedly made to the company’s customers.

Source: Travelers Bond & Financial Products, Bulletin, 11-09

Here are a few threats that can be overlooked:

1.  Your Friends List
“Social media” can be very helpful when making contact with customers, finding jobs, corresponding with potential clients, etc. But dangers lurk when all the people in your friends list have access to your comments. Ranting and raving about your boss and forgetting that he/she is listed as “your friend” can lead to obvious problems.

2.  Employers Fail To Set Internet Usage Policy
Many companies are using blogs and social networking to their advantage; however, they can also become a liability risk. It is vital that policies are in place for how and when employees can use the Internet and that personal data is secured.

3.  Hackers Look For Any Open Door
Any employee using these sites while on the job exposes the organization to phishing, being hit by spam, and malware attacks. One result shows that a quarter of all businesses have been affected by “social media” use in the workplace.

4.  Providers Fail to Take Appropriate Safety Measures
Lawsuits are beginning to target the social media companies for privacy issues along with user-generated content. Several classmates set up a private group on Facebook. Now Facebook has been named in a lawsuit for over allegedly defamatory content contained in the private group’s comments.

5.  Ignorance Is Your Loss
An even bigger danger is to ignore the social media frenzy. In doing so Companies lose the newest, most poplar opportunity to stay in touch with their markets, their clients, and build customer relationships. Just be wise in how your company uses social media.

Source: Patricia Vonwinkle   Risk and Insurance

“Many employees disable the encryption solutions on their laptops, putting their employers at risk for data breaches, according to a study by Absolute Software Corp. and The Ponemon Institute.”

The study specifies “Corporate America” is being affected by the behavior of employees who destabilize data protection.  This behavior is resulting in encryption not being enough to protect laptops and other mobile devices that have sensitive information stored on them.  The number one source of data loss is from lost or stolen laptops.  When a laptop has been stolen, 3 out of 4 companies will incur a data breach.  

Necessary safety measures are not being taken by business owners to secure their laptops.  Some business managers even deactivate their laptops’ encryption making themselves and their clients more vulnerable to identity theft.  Additional layers of security can be utilized to identify data that has been accessed, even delete sensitive information remotely, and find a lost or stolen laptop.  Employers can not afford to rely on the behavior of their employees nor encryption technology to provide the data protection they need according to this study.  

Source: Absolute/Ponemon

http://www.insurancejournal.com/news/national/2009/04/27/99982.htm