{"id":196093,"date":"2022-07-18T17:01:24","date_gmt":"2022-07-18T11:31:24","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=196093"},"modified":"2022-07-18T17:01:24","modified_gmt":"2022-07-18T11:31:24","slug":"the-rise-in-the-incidence-of-digital-fraud","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/the-rise-in-the-incidence-of-digital-fraud\/","title":{"rendered":"The rise in the incidence of digital fraud"},"content":{"rendered":"\n

Source<\/strong>: This post is based on the article \u201cThe rise in the incidence of digital fraud<\/strong>\u201d published in Business Standard<\/strong> on 17th Jul 22<\/strong>.<\/p>\n

Syllabus<\/strong>: GS3 – Economy – Money and Banking<\/p>\n

Relevance<\/strong>: Financial fraud in the banking sector and related issues<\/p>\n

Context<\/strong>: Over the years, there has been a significant change in the types of frauds affecting the banking industry.<\/p>\n

Moreover, the economic slowdown has only heightened the risk of fraud and money laundering for the banks.
\n<\/span><\/p>\n

Why managing financial fraud is significant?<\/h5>\n

Managing fraud has become more important for banks, due to a)<\/strong> increased regulatory scrutiny, b)<\/strong> increased stakeholder expectations and c)<\/strong> the detrimental effect of the actual fraud loss incurred. <\/span><\/p>\n

Change in the nature of frauds<\/h5>\n

There is an increase in digital or technology-related frauds, such as ATM skimming, mobile\/internet banking, and identity\/data theft, in addition to cyber risks faced by banks.<\/span><\/p>\n

Why cybercrime needs to be tackled effectively by banks?<\/h5>\n

Cybercrime and tech-related frauds cause a)<\/strong> reputational damage, b)<\/strong> diminished customer and investor confidence, and c)<\/strong> theft\/loss of personally identifiable information. Together, these add up to substantial risks for financial services companies. <\/span><\/p>\n

These issues ultimately have the potential to affect the financial ecosystem and, in extreme cases, may lead to a systemic crisis.<\/span><\/p>\n

What are the measures that banks should initiate?<\/h5>\n

Banks should consider investing in technology to evolve their fraud risk management frameworks (FRM) to tackle newer and more complex challenges.<\/span><\/p>\n

Banks and financial institutions (FIs) should consider the following proactive steps:<\/p>\n

–<\/strong> Banks need to integrate a larger financial crime compliance agenda<\/strong> that will work across the business, compliance, legal, credit, and operations departments.<\/p>\n

–<\/strong> Institutions need to take the time to measure the effectiveness, appropriateness, and efficiency of existing controls against an updated risk assessment.<\/strong><\/p>\n

–<\/strong> The current methods of FRM are plagued with a lack of centralised control\/monitoring from various systems, and issues related to data availability and quality. This results in increased frauds and delayed detection.<\/strong><\/p>\n

–<\/strong> In light of impending risks from digital platforms, banks should consider building cyber-risk management programmes<\/strong> to achieve three essential capabilities: the ability to be secure, vigilant, and resilient.<\/p>\n

Way forward<\/h5>\n

Risks are inherent in the banking business. However, with frauds on the rise, organisations need to put their business in order by having effective control mechanisms in place.
\n<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Source: This post is based on the article \u201cThe rise in the incidence of digital fraud\u201d published in Business Standard on 17th Jul 22. Syllabus: GS3 – Economy – Money and Banking Relevance: Financial fraud in the banking sector and related issues Context: Over the years, there has been a significant change in the types… Continue reading The rise in the incidence of digital fraud<\/span><\/a><\/p>\n","protected":false},"author":10328,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,216],"class_list":["post-196093","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-3","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1701154927},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/196093","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10328"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=196093"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/196093\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=196093"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=196093"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=196093"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}