Coronavirus impact on fraud, conduct & reputation
- 21 April 2020
How is coronavirus impacting fraud, conduct and reputational risk profiles?
Throughout the coronavirus (Covid-19) situation, we're holding weekly calls with our member firms based all over the world. These calls give senior operational risk experts from around the globe the chance to talk to their peers from other financial institutions. In the calls, they share the challenges they are currently facing due to coronavirus, and can discuss strategies and ideas for managing these issues.
Our disussion on 14 April focused on the impact of coronavirus on fraud, conduct and reputational risk profiles. Here are just some of the highlights (all ORX members can read a full summary of the discussions on our members-only website).
Impact of coronavirus on fraud
Lockdowns have now been imposed in many countries across the world. Because of this, lots of branches are either closed or are operating under restrictions, this means that the risk of physical fraud is expected to decrease.
However, many of our members anticipate that fraud will increase through virtual methods – for example social engineering and malware attacks. Vulnerable customers and staff working from home are expected to be targeted with phishing attacks. You can read more this in our recent blog about the impact of coronavirus on cyber risk.
On top of the increased risk of cyber fraud, the transition to having many employees working from home raises the risk of internal fraud.
How can institutions combat this?
Our members discussed a few ways which could help manage this situation, including:
- Increasing monitoring
- Adapting controls for home-working
- Regular check-ins with staff
- Recording phone calls
- Banning unsecure communication platforms
Impact of coronavirus on conduct
To mitigate the economic impacts of coronavirus many governments are announcing new measures, such as loans and payment holidays. As a result, financial organisations are having to launch new products very quickly. This can make it a challenge for firms to ensure that appropriate controls and monitoring are in place, and with staff working remotely it can be difficult to carry out the necessary training. All of this increases the potential for misinterpreting policies or giving out the wrong advice to customers.
How can institutions combat this?
Some of the measures organisations are considering include:
- Increasing communications
- Producing best practice guides
- Regular information security reminders
- Increasing diligence
Impact of coronavirus on reputation
How institutions respond to the pandemic could cause lasting reputational damage. Customer service and communication are now more important than ever.
With government actions relating to coronavirus continually in the headlines, the media is focusing on how banks and insurers are implementing debt-relief packages. So, organisations need to clearly communicate any temporary changes to products and how government relief packages work with their customers.
A combination of remote working and increasing numbers of queries are creating challenges for customer service teams, and this can have a knock-on effect on an institution's reputation. For example, some organisations have found that long waiting times at call centres have already been the subject of negative press.
As we enter a period of expected economic downturn, institutions will be making conscious efforts to retain their customers, so being aware of threats to your reputation is incredibly important.
Read more from our discussions with the ORX membership
Brief summaries from each of the discussions we've held with our membership so far are available for you to read on our website. If you'd like to know more about the work we're doing to support financial organisations and operational risk professionals through the coronavirus situation, then please do get in touch with us.
Or, see how your firm could become a member of ORX and be part of a global community advancing the management of operational risk.