risk management - Director Magazine

THE FIGHT AGAINST FRAUD
THREAT FROM ORGANISED CRIME
Organised crime is a new challenge for insurers and appears to be on the increase in the
UK. Zurich has identified two techniques used whereby gangs particularly target companies
in industry sectors that produce and trade in valuable goods.
One tactic is for gang members to obtain jobs on the logistics side of a company’s
operations or in production areas. These ‘sleepers’ then work reliably for months – or even
years – before they start to ship goods onto the black market. It is hard for companies to
identify the source of losses, as the perpetrator is unlikely to be under suspicion.
A second tactic is to target people already working in a company and ‘persuade’ them to
co-operate in the crime. Again, the use of an insider makes it hard to detect the crime early.
However, there are a number of ways to combat the threat posed by organised crime:
ensure robust inventory checks and audit processes are conducted regularly
new employees need to be vetted very carefully. Specialist agencies conduct
adequate follow-up checks on references
be aware that employees with personal or financial problems may be easy targets
be alert to early signs that fraud is being committed: change in order patterns, inventory
discrepancies, increase in stock turnover not reflected in increased sales and profits
share information with other companies regularly and try to identify risks early
attack of the clones
Cloning is another pernicious form of fraud, usually inflicted on businesses that
deal with valuable goods, such as precious metals, consumer electronics or
mobile phones. The scam is simple, but can be devastating. First, the fraudster
obtains the letterhead of a company’s major customer and orders goods to
be sent to a location other than the normal delivery address. When the
delivery vehicle arrives it is met by the fraudster, with their own lorry, who
explains that the address was incorrect and that they are now responsible for
taking the goods to the right destination. Often, they take not only the goods,
but also the original bills of lading and the company’s driver is sufficiently
confused as to forget to remember the fraudster’s vehicle details.
A few straightforward measures can help prevent such scams:
do not place customer data (business names or addresses) on your
website unless you need to
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