With the unexpected and unprecedented challenges of 2020, businesses and organizations have had little time to adjust to the changing circumstances. Significant increases in rates of fraud and employee theft have staggered businesses caught in transitional periods. Going into 2021, businesses should have an idea of upcoming risks and how to mitigate them.
Based on trends throughout 2020, like many in the accounting and insurance industries SDC CPAs anticipates increases in internet sales fraud, employee theft, and targeted cyber fraud.
Notable Risks for the New Year
Throughout 2020, online sales have increased beyond initial expectations due to a diminished physical retail presence along with high demand for work-from-home equipment and personal protective equipment. The vulnerabilities that come with online purchasing and high demand created an environment in which fraudsters have been able to take advantage of current circumstances. The extreme increase in internet sales fraud may be expected to continue into 2021. Based on the risk of fraud, individuals and businesses should use care and caution when purchasing online, thoroughly vet vendors, and monitor purchasing.
Instances of employee theft are also expected to rise in 2021 due to further interruptions and changes to workflow. Companies become particularly vulnerable to employee theft during periods of transition with changing security measures and limited oversight. As companies move between on-site and work-from-home models, risk of employee theft may rise. At these transitional points, organizations must carefully monitor for instances of fraud.
One of the most costly forms of fraud in 2020 was targeted cyber fraud, in which publicly available information about an organization is used to create a convincing phishing email. This type of cyber fraud is effective because it typically targets individual employees authorized to make transactions and uses urgency, authority, and confidentiality to put pressure on the employee. These cases can be especially problematic for remote work environments where oversight is minimal. Going into 2021, employees should be well trained and briefed on company security and confidentiality protocols.
To prepare for the challenges that will come with the new year, companies should assess their fraud detection and security measures. When looking ahead to the upcoming year, special attention should be paid to mitigating anticipated fraud risks.