FIGHTING FRAUD IN THE ERA OF DIGITALIZATION
The COVID-19 pandemic has triggered a significant shift towards digitalization, leading to an unprecedented surge in e-commerce. However, this digital transformation has also resulted in a sharp increase in fraudulent activity, with the United States alone experiencing a 57% rise in fraud losses in 2021 compared to the previous year. Fraud has become a critical concern for businesses, as it not only impacts their bottom line but also undermines customer trust and brand reputation. In this article, we will explore the challenges of combating fraud in the digital era and introduce a new approach proposed by McKinsey. We will delve into the four key capabilities companies must develop to enhance their fraud resilience and explain why protecting data should be at the forefront of any anti-fraud strategy. Finally, we will introduce Hcode Technologies, a team of experienced professionals who are dedicated to helping businesses build secure tech products and stay ahead of potential threats and vulnerabilities.
The high stakes of fraud
The COVID-19 pandemic accelerated the shift to digital, resulting in a boost to e-commerce estimated to exceed $200 billion in 2020 and 2021. However, this rapid digital adoption also led to a major increase in fraudulent activity. In 2021 alone, fraud losses in the United States rose to $5.9 billion, a staggering 57% increase compared to the previous year. Internet crime losses also soared to $6.9 billion, up 69% from 2019. Businesses lose 5% of their annual revenue to fraud, which amounts to $4.5 trillion worldwide.
Companies that fail to manage fraud effectively risk losing more than just revenue. They can also damage their reputation and customer trust, which can be extremely difficult to recover. Therefore, investing in fraud management is no longer optional but a critical necessity for businesses today.
A new approach to fraud management
McKinsey proposes a new approach to combatting escalating fraud threats. This approach includes ensuring the company has an end-to-end fraud strategy, creating a reputation that deters fraudsters, conducting constant risk and threat assessment, establishing a flexible, adaptive control strategy, and taking a proactive approach to consumer awareness and education.
Stay Ahead of Fraud: Enhance Your Threat Intelligence, Embed Defenses, Embrace Agility, Test and Learn. These are the steps companies must take to become more resilient, provide better customer experience, support growth, and deliver sustainable returns.
Data theft: The root of most fraud
Cybercriminals use phishing, malware, social engineering, and hacking to steal sensitive information from individuals and organizations. This stolen data is then used to carry out fraudulent activities such as identity theft, account takeover, and unauthorized financial transactions. Therefore, companies should focus on protecting their data by implementing strong cybersecurity measures such as encryption, multi-factor authentication, and regular security audits. By safeguarding their data, companies can mitigate the risk of data theft and reduce the likelihood of fraudulent activities.
At Hcode, the team believes in the fundamental importance of security in digital products and services. They specialize in assisting businesses in building secure tech products, with an experienced team of professionals dedicated to keeping clients ahead of potential threats and vulnerabilities. Hcode is committed to ensuring its clients’ confidentiality, integrity, and availability of sensitive data.
The prevalence of fraud in the digital era is a serious concern for businesses, with significant financial and reputational risks. Companies must prioritize developing the capabilities of fraud resilience, including improving threat intelligence, fast-cycle testing, advanced data and analytics, and transforming their operating model. Protecting data is also critical to mitigating the risk of fraud, and companies should implement robust cybersecurity measures.
By partnering with Hcode Technologies, businesses can benefit from experienced professionals who specialize in building secure tech products and keeping clients ahead of potential threats and vulnerabilities. With the right approach and expertise, businesses can stay ahead of fraudulent activities and build a resilient and trustworthy brand.
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Look no further. HCode is ready to help.