External fraud is among the top 5 operational risks for financial organizations
ORX, an operational risk association with more than 100 banks and insurers around the world, has published its findings on the biggest operational risks encountered in the financial sector. The Top Risk Review report from November 2021 shows that information security risk was the number one concern, followed by technology and third-party risk.
According to the report, the information security risk, driven by cyber threats, continues to challenge the industry. With digitization continuing at a rapid pace and on a global scale, the cybersecurity risk landscape is changing rapidly with increasingly frequent and sophisticated attacks, particularly phishing and ransomware, all creating a sense of “living in.” constant fear ”.
However, the good news is that while businesses are seeing an increasing number of events across various industries, most are avoiding successful attacks.
Interestingly, this year’s report reveals that external fraud has entered the top five (since 9th place), replacing business continuity. The variety, volume and sophistication of external fraud attempts present an evolving and ever-present challenge in an economically turbulent environment.
|Ranking||Review of key risks (September 2020)||Review of key risks (May 2021)||Review of key risks (October 2021)|
|1||Information Security (including Cyber)||Information Security (including Cyber)||Information Security (including Cyber)|
|2||Third party||Third party||Technology|
|Business continuity||Regulatory conformity||Third party|
|5||Regulatory conformity||Business continuity||External fraud|
Luke Carrivick, ORX Director of Research and Information explains: “The fierce competition from entrants in the disruptive digital-centric market, the threat of rapidly evolving cybercrime, the lasting impact of the covid pandemic. 19 and increasing stakeholder expectations are pushing companies to adopt new technologies. at a faster rate than ever.
“The ripple effect is a new form of risk management that will mitigate any potential oversight of change and vulnerabilities that may be exposed, discovered and potentially exploited (eg by cybercriminals) along the way.
“At the same time, I’m not surprised to see an increase in external fraud in this latest report. External fraud has been a pervasive risk, and along with a growing cyber threat, there has been an increasing variety of physical external fraud. These, combined with the increase in fraudulent activity and the vulnerability of customers due to covid, have created the perfect storm.
“Now that the impact of the pandemic is starting to be felt, the business continuity challenge is evolving. Companies are now focusing more on building their operational resilience, focusing on areas such as the impacts of hybrid work and, longer term, the impact of climate change on operations.