External fraud is a growing threat to businesses worldwide. Fraudsters are using increasingly sophisticated methods to exploit vulnerabilities. Whether it is phishing, financial fraud or identity theft, companies of all sizes are at risk. Understanding external fraud, the different types of external fraud and preventive measures can help to better protect your company.
This article contains:
Key Insights
- External fraud includes phishing, invoice fraud and identity theft.
- Preventive measures such as double approval and email security are crucial.
- Allianz Trade offers fraud insurance for financial protection.
What is external fraud?
External fraud refers to fraudulent activities initiated by individuals or entities outside a company, often aimed at deceiving, manipulating or exploiting the company for financial gain. Unlike internal fraud, which involves employees, external fraud is perpetrated by outsiders, such as criminals, customers or external partners. External fraud can result in significant financial losses, reputational damage and operational disruption for companies.
What types of external fraud are there?
Contrary to popular belief, external fraud is not just about cyber-attacks or phishing scams. External fraud can take many other forms, of which false invoices are by far the most common. Here are the types of external fraud most encountered by companies:
- Invoice fraud: Invoice fraud occurs when fraudsters submit false invoices for payment, either by posing as a legitimate supplier, or by creating fake companies from scratch. As a result, companies may have to pay for goods or services that were never delivered.
- False customer fraud: False customer fraud takes many forms, to extort money or goods from businesses. A false customer is a fraudster impersonating a customer. The fraud aims to divert funds or goods from a company, by reporting a change of address or intercepting goods before delivery.
- Identity fraud: In identity fraud, fraudsters pretend to be someone they are not, usually the company's top executives (CEO fraud), to trick employees into making unauthorized payments or revealing confidential data.
Increased risk of fraud
Every year, we conduct a survey on corporate fraud. Our 2024 survey shows that Belgian and Dutch companies are still victims of fraud and scams with great regularity: 69% of companies have experienced fraud attempts in the past 2 years.
Increasing digitalisation and the rise of artificial intelligence make it even more difficult to detect fraud.
How to avoid external fraud?
To avoid external fraud, there are preventive measures you can take:
Fraud insurance as ultimate protection
Unfortunately, fraudsters are becoming increasingly ingenious, constantly adapting their methods to changing circumstances and events. Although preventive measures can reduce the risk, it is impossible to eliminate it entirely. A fraud insurance can provide crucial protection against the financial consequences of external fraud.
Whether fraud is committed from inside or outside your company, the financial losses have a major impact on your business. With our fraud insurance, you can protect your business against financial loss due to both internal and external fraud. Our insurance covers not only financial loss, but also damage to systems and reputation. Moreover, you can count on expert advice to help you avoid fraud.
Do you want to know more about our fraud insurance? Contact our team. Our experts will be glad to help you.
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