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SuraLinkWritten by Johnny Prewitt, The Prewitt Group
Along with the wonderful advantages and conveniences technology has provided for us, unfortunately there also exists a dark side that comes along with these advances. This includes the ever-increasing risk for your business for both cybercrime and criminal fraud committed by individuals. Today, we will be discussing the difference between cybercrime coverages and fidelity bonds, and how important these policies can be in protecting your business and its future success.
Cybercrime encompasses many different forms of attack and they are on the rise more than ever. According to statistics released by the Federal Bureau of Investigation relating to BEC (Business Email Compromise) attacks:
- In 2018, there were more than $12.5 billion in identified exposed losses, compared to $5.3 billion in 2017.
- There were 78,617 global reported incidents in 2018, compared to 40,203 incidents in 2017.
Some of the most common of these crimes are social engineering and phishing campaigns. A social engineering attack occurs when criminals engage directly with humans and often times appeal to their emotions in order to manipulate them into releasing information or even paying money. Once money has been paid, it is probably sent to a foreign bank and it’s highly unlikely it can be recovered. Phishing campaigns feature fraudulent emails which are sent to individuals either designed to steal personal information from the victim, or they may contain a link or attachment which will then install malware on the computer or device.
Although these types of attacks are on the rise and are very difficult to detect, there is some good news. Thanks to the compilation of data related to these crimes over the years, more and more advances have been made in how to be proactive in preventing these crimes from occurring. Although they can be difficult to avoid completely, if clients can gain the knowledge and awareness in recognizing these attacks and how they work, along with how to identify suspicious activity, we can decrease their prevalence and lessen the damage that is done. Additionally, cyber policies can be purchased which will limit exposure to a loss when a cyber incident occurs by providing experts in legal, computer forensics, notification, call center, public relations, fraud consultation, credit monitoring and identity-restoration services areas. Policyholders are given tools and resources needed to address and gauge key areas of cyber security risks before an event even occurs.
What about a crime or fraud that occurs due to an individual’s act or even from within your organization? This is where fidelity bonds come into play. Although many traditional policy packages include protection against crime, there are typically gaps in coverage that may not cover computer fraud, funds transfer fraud, money order and counterfeit currency fraud and credit card fraud. By purchasing additional crime coverage, you can acquire optional insurance for company clients, which would provide protection in the event one of your employees steals from a client; optional sublimit of coverage is available for expenses associated with investigation and establishing a covered loss; legal expenses provided outside the limit of liability – the defense of the customer; and worldwide coverage ensures that no matter where the fraud occurs, it’s covered by the policy.
It is critical that companies are aware of these risks and the stark reality that these crimes occur every day, on a widespread basis, and can have catastrophic effects on their business and whether it succeeds. If you have any questions or would like any additional information on fidelity bonds, feel free to reach me at jprewitt@prewitt.group.