The use of technology has undoubtedly assisted and accelerated the growth of our industry, enabling firms to cope with increasing volumes.  However it has opened up a number of other risks beyond the ones that traditionally affect our market.

The increasing sophistication of fraudsters has been a topic of much discussion.  ID theft, diversion of money transfers, interception of email and even valuation fraud, has all become more prevalent in the past few years.  While systems’ builders get better and better at building in safeguards, the fraudsters get ever cleverer at getting around them.

A hot topic at the moment is cyber-attacks and how safe lenders are from these.  This can cause everything from the freezing of a system so it can no longer be used, to the stealing of confidential client data.  The dependence of firms on computer systems means that disaster recovery plans need to be in place.  Even simple measures, such as ensuring that backups are done daily and that data is replicated out of business premises, are not always in place. 

The question is, how prepared are lenders and brokers?  It is often hard for a firm to even identify all of the risks that may affect them, so it raises the question that, should you be affected, would your insurance would cover you?  Outside help and information is often critical in ensure that the correct cover is in place.

Knowledge of what is happening is clearly important.   Most of the issues risk affecting the whole industry rather than just individuals. So an industry approach to solving them has to be the answer.  Participation in fraud detection schemes and open discussion with peer businesses can improve awareness and help combat financial crime.

We are operating in an ever more uncertain world; so the number of issues that can affect a business is growing.  We need to adopt the boy scouts’ motto – “be prepared”!

A version of this article (“Fraud risks grow as technology advances) was published by Specialist Lending Solutions on 21 June 2016