Fraud & Cyber Security in Treasury

Fraud and cyber security threats are significant risks for corporate treasury departments. Corporate treasury is responsible for managing a company’s financial resources, including its cash, credit, investments, and financial risks. In today’s digital world, corporate treasury departments face a range of threats from fraud and cyber security breaches.

Fraud in Treasury

Fraud can come in many forms, including employee fraud, vendor fraud, financial statement fraud and BEC fraud. Employee fraud refers to any fraudulent activity committed by an employee, such as embezzlement, theft, or false expenses. Vendor fraud refers to fraudulent activity by a vendor or supplier, such as overcharging or providing false invoices. Financial statement fraud refers to the manipulation of a company’s financial statements, such as by misstating revenues or assets. BEC scams, also known as Business email compromise, are fraud attempts aimed at businesses through email with the purpose of stealing money.

Cybersecurity in Treasury

Cybersecurity threats can include phishing attacks, malware, ransomware, and data breaches. Phishing attacks involve the use of fake emails or websites to trick individuals into revealing sensitive information, such as login credentials or financial information. Malware is malicious software that is designed to damage or disrupt computer systems. Ransomware is a type of malware that encrypts a victim’s data, demanding payment in exchange for the decryption key. Data breaches involve the unauthorized access of sensitive information, such as customer data or financial records.

How can the treasury department protect from fraud & cyber security?

To protect against these threats, corporate treasury departments should have robust internal controls and policies in place. Internal controls refer to the processes and procedures that a company has in place to ensure the accuracy and reliability of its financial information, as well as the effectiveness and efficiency of its operations. Some examples of internal controls that can be relevant for corporate treasury include:

• Separation of duties: This involves dividing tasks among different individuals or departments, so that no one person has complete control over a process. For example, the person who prepares the company’s bank deposits should not be the same person who reconciles the company’s bank statements.
• Background checks: Conducting background checks on employees can help to identify any potential red flags, such as a criminal history or a history of financial problems.
• Strong passwords and multifactor authentication: Using strong passwords and implementing multifactor authentication can help to prevent unauthorized access to financial systems and data. Multifactor authentication involves using more than one method to verify a user’s identity, such as a password combined with a fingerprint or a one-time code sent to a phone.
• Employee training: Regularly training employees on how to recognize and prevent fraud and cyber threats can help to reduce the risk of incidents occurring. This can include training on topics such as phishing scams, password security, and the importance of reporting suspicious activity.

It is also important for corporate treasury departments to have a plan in place for responding to a fraud or cyber security incident. This can include working with law enforcement and cybersecurity experts to investigate and mitigate the impact of the incident. The plan should also include procedures for communicating with relevant stakeholders, such as employees, customers, and shareholders.

Summary fraud & cyber security in corporate treasury

Overall, the key to protecting against fraud and cyber security threats in corporate treasury is to stay vigilant, regularly review and update policies and procedures, and have a plan in place for responding to incidents. By taking these steps, corporate treasury departments can help to safeguard their company’s financial resources and reputation.