The new wave of fraud occurring across the commercial world, and in particular banks, is identity fraud, according to Adam Plummer, fraud manager for Zurich Financial Services Australia.

“Misuse of identity lies at the heart of a wide range of criminal activities,” he said.

Identity fraud extends from relatively simple cases in which an individual gains access to a computer using someone else’s password, to extensive deliberate fabrication of documents in order to perpetrate financial crime, Plummer told Risk magazine.

While a single act of identity fraud may contravene both Commonwealth and State/Territory laws, he said on many occasions such crimes are committed across numerous countries.

“In the context of the insurance industry, fraud against insurers is nothing new. For as long as people have been able to form the intent to deceive for financial gain, insurers have needed to remain vigilant in protecting their financial bottom line from the few unscrupulous people among policyholders,” he said.

“There are many and varied ways of committing fraud against an insurer with the most standard approach being the lodgment of a fraudulent claim. This can range from the embellishment of a genuine property loss claim to an entirely fictitious, false and staged event.”

The risks organisations can be exposed to in not addressing their fraud problem are loss of company profits, loss of shareholder and customer confidence and damage to business reputation,” he said.

“Over the past five to ten years there have been many cases where internal external fraud threats have caused some companies to become so destabilised almost forcing them to the brink of collapse.”

It is common knowledge that certain groups of professional fraudsters target those organisations that do not have a structured approach to fraud threats, and as such, a dedicated, robust and structured approach to addressing internal and external fraud is a must in tackling fraud, Plummer said.

For all staff to embrace an anti-fraud culture, the message must first be communicated from the top down.

“In other words, the CEO or MD of the organisation needs to advise staff that fraud will not be tolerated at any level and any incidences of fraud will be investigated and prosecuted vigorously,” he said.

“An established anti-fraud policy also needs to be developed and communicated. Fraud training of staff (computer based or face-to-face) is also essential to raise the awareness and knowledge of fraud and its impact on the organisation.”

In the context of external fraud by policyholders, he said a robust and analytically based fraud indicator program should also be in place.

“This will assist in the detection of a possibly fraudulent or suspicious claim and allow the appropriate internal investigation resources to further investigate the legitimacy of the claim.”