When we think of a store being robbed, we tend to think of some guy walking in with a mask on, maybe carrying a pistol or a baseball bat, or a knife. A recent Globe and Mail report shows, however, that most theft now takes place online, as opposed to physically. In our wired age this is just another manifestation of how all things are going digital.
According to risk consulting firm Kroll’s annual Global Fraud Report, electronic theft was reported by 27.3 per cent of companies, just eclipsing physical theft, which was reported by 27.2 per cent of businesses.
According to Kroll’s report: “Among the hardest hit were financial service firms, 42 per cent this year versus 24 per cent in 2009, professional services, 40 per cent versus 27 per cent, and those in technology, media and telecommunications, 37 percent versus 29 percent.”
When you consider the fact that the majority of money in banks is in a digital rather than physical form, it is clear that the long term possibility for growth in this kind of theft is quite large. According to Kroll, most theft was carried out by employees, rather than outside hackers.
Kroll also reported that between the year 2009 and 2010, electronic theft rose by 20 per cent. Why is electronic theft on the rise? According to Robert Brenner, vice president of Kroll’s Americas regional sector, “Theft of confidential information is on the rise because data is increasingly portable, and perpetrators — often departing or disgruntled employees — can remove it with ease in the absence sufficient controls. At the same time, there is a growing awareness among thieves of the increasing intrinsic value of an organization’s intellectual property.”
This increase in digital theft is causing economic problems as well, as many companies are passing up opportunities in emerging markets such as China, Africa and Latin America, since the rate of electronic theft in some of these countries is amazingly high. The Globe and Mail, for example, reporter that in China 98 per cent of businesses reported being affected by electronic theft.
According to an interview the Globe and Mail, this is more than just a mere nuisance to companies, it could be a threat to their existence. Tommy Helsby is the Kroll chairman for Europe, Middle East and Africa. “There’s a real range of dangers,” Helsby says. “It can be simple theft or the risk of reputational damage if your firm loses customer data. That itself could be an existential threat to your business.”
Think of credit card companies or companies that manage health records. With so much sensitive customer information being stored electronically, and with people expecting their privacy to be protected, companies can be at risk of being severely compromised if they lose control of their electronic information.
When we consider how much of our world is now digitally-based, the long-term negative effects of this trend are troubling. So, what can companies do to reverse this trend? According to Kroll, there is much more that firms can and should be doing to protect their electronic assets, especially among North American firms. “North American companies currently enjoy a relatively benign fraud environment. They will need to address growing risks, especially in information security, to keep things that way,” Kroll’s report states.
All things considered, it really shouldn`t be a surprise that electronic theft is increasing. Almost every aspect of our lives has become more and more computer-based, it was probably inevitable that theft would go digital too.
