Firms see uptick in fraudulent instruction cyber losses – Beazley

Fraudulent instruction as a form of cyber attack is on rise, revealed Beazley’s latest Cyber Services Snapshot report, released today (31 October 2022).

The report revealed that the average percentage of cyber losses caused by fraudulent instruction for all industries reached 16% between Q1 and Q3 2022, compared to 11% for all of 2021 and just 7% for 2020.

It also highlighted that 18% of professional service firms had experienced fraudulent instruction during the first three quarters of this year – compared to 17% for the whole of 2021 and 12% for 2020.

The rise was even more stark for retail business – between Q1 and Q3 this year 25% of cyber losses for these firms came in the form of fraudulent instruction losses, compared to 13% in 2021 and 8% for 2020. 

Non-profit firms experienced a similar rise – between Q1 and Q3 2022 these firms saw 25% of their cyber losses originate from fraudulent instruction, compared to 12% in 2021 and 6% in 2020. 

According to Beazley’s Breach Insights (March 2017), fraudulent instruction is the transfer of funds by an employee outside of an organisation to a third party, as a result of deceptive information provided by a criminal purporting to be someone else – typically a vendor, client or authorised employee.

Crisis consequences

Bala Larson, head of client experience at Beazley, said: “The past two years of pandemic-driven remote work have led to decreased inter-departmental communication and less oversight overall, making the likelihood that an organisation has an incomplete asset inventory greater than ever.

“Good asset management is good governance and as such, it needs to be built into business decision-making.

“Organisations that fail to do so inherently expose themselves to cyber breaches that result in higher costs and more liability.”

The data used for the research reflects Beazley’s claims incidents during 2021 and between Q1 and Q3 of 2022 respectively. 

Beazley stated it would not disclose the number of respondents that took part, due to figures being proprietary.