What Non-Traditional Risks Should Be Paid More Attention?
In the evolving landscape of corporate risk management, we've gathered insights from six risk professionals, including CEOs and CTOs, to shed light on non-traditional risks that need more attention. From the importance of monitoring brand hijacking and user feedback to securing against third-party cyber threats, these experts provide valuable perspectives on safeguarding your company's future.
- Monitor Brand Hijacking and User Feedback
- Mitigate Insider Threats with Controls
- Vet Employees and Strengthen Contracts
- Combat Fraud with Improved Detection
- Prioritize Data Privacy Measures
- Secure Against Third-Party Cyber Threats
Monitor Brand Hijacking and User Feedback
Companies should pay more attention to several non-traditional risks, with brand hijacking being the most prevalent threat:
Brand Hijacking: Threat actors increasingly misuse or hijack brand names for monetary gain. This often involves impersonating the company on social media to spread false information or conduct phishing attacks. Another common tactic is typosquatting, where attackers create domains that closely resemble the official website, tricking customers into believing they are legitimate and scamming them. These methods are widespread and particularly dangerous.
User Feedback: Negative reviews on platforms like Google Reviews, YouTube, Yelp, and other forums can severely impact consumer perception and sales. Social media influencers and bloggers also play a significant role in shaping consumer opinions with their posts, reviews, and comments, whether positive or negative.
Customer Expectations: Today's consumers often use social media to amplify their issues with a brand. Even minor problems can go viral, damaging the company's image. To prevent this, companies should monitor social media channels and maintain transparency with their customers regarding any issues.
In conclusion, companies must be vigilant about non-traditional risks such as brand hijacking, user feedback, and heightened customer expectations on social media. Addressing these risks proactively through continuous monitoring and transparent communication can help safeguard a company's reputation and maintain consumer trust.
Mitigate Insider Threats with Controls
There's one non-traditional risk companies need to pay attention to: insider threats. A threat like this can come from employees, contractors, or business partners who have legitimate access to the company's data but misuse it, either maliciously or unintentionally. It's possible that a disgruntled employee will leak sensitive financial information to a competitor, causing substantial damage to the company's reputation and market position.
Meanwhile, a well-meaning employee might fall victim to a phishing attack, giving cybercriminals access to critical systems. The best way to mitigate these risks is to implement stringent access controls, conduct regular security awareness training, and use monitoring tools to detect suspicious activity. It's important to understand and address insider threats to keep a company safe.
Vet Employees and Strengthen Contracts
As a business litigation attorney, one non-traditional risk I see companies overlook is failing to properly vet employees and third-party contractors. Not performing background checks or enforcing strong contracts can lead to legal issues, data breaches, and damage to company culture.
For example, we had a client who hired a contractor to develop software without a non-disclosure agreement. The contractor ended up using proprietary data to create a competing product, resulting in an expensive lawsuit. Conducting due diligence on employees and contractors, and ensuring strong contracts are in place, could have prevented this.
Another risk is neglecting to get proper counsel on business decisions. One client acquired another company without consulting lawyers first. We later found the acquisition included several undisclosed liabilities that ended up costing the client over $500K. Consulting attorneys on major business moves can identify risks not apparent to company executives and save money in the long run.
Small investments in risk management, like background checks, contracts, and legal counsel, may seem unnecessary but can have significant payoffs by avoiding costly problems down the line. Companies should take a proactive approach to risk and seek guidance from experts whenever possible. An ounce of prevention is worth a pound of cure.
Combat Fraud with Improved Detection
One non-traditional risk that companies should pay more attention to is the growing threat of fraud and scams, particularly account takeover and authorized push payment fraud. These types of fraud have been increasing at alarming rates, with the Federal Trade Commission reporting a 49% rise in scams in 2022 compared to the previous year, resulting in nearly $8.8 billion in consumer losses.
Fraud protection is critical not only for maintaining payment system integrity but also for managing customer experience and protecting against reputational risk. Companies need to improve their fraud detection and prevention strategies by employing multiple authentication methods, such as biometric identification and real-time monitoring using AI and machine learning. Additionally, maintaining open communication with customers about fraud prevention measures can foster confidence and improve the overall customer experience.
Addressing this risk is crucial because the implications of fraud extend beyond financial loss to include potential damage to a company's reputation and customer trust. As fraud techniques evolve, companies must stay vigilant and continuously adapt their risk management practices to safeguard against these threats.
Prioritize Data Privacy Measures
Data privacy is one non-traditional risk that companies should pay more attention to. In today's digital age, breaches in data privacy can lead to significant legal, financial, and reputational damage. For instance, I once worked with a company that underestimated the importance of securing customer data. A breach occurred, resulting in a loss of customer trust and substantial legal fees. This experience taught me that proactive measures in data security are not merely an IT concern but a critical aspect of risk management.
Secure Against Third-Party Cyber Threats
One non-traditional risk that companies should pay attention to is cybersecurity threats known to originate from third-party vendors. Here's why:
Many companies rely on third-party vendors for some of their services, such as software and components. It can expose you to cybersecurity risks if the third parties do not have any measures against these threats.
Such loopholes in smaller companies result in data breaches, service disruptions, or sometimes regulatory non-compliance for the main company. Modern supply chain networks involve several interconnected vendors and are complex. It signifies that each vendor is a potential entry point for cyber threats.
Here is how one can reduce the risk:
Conduct detailed research of all the vendors before connecting with them and do the same on a regular basis after that. Be open to communication and express your expectations when hiring vendors. Raise cybersecurity awareness by training and collaborating with best practices for the vendors.
