The construction industry’s exposure to fraud is changing and businesses operating in this sector need to put in place robust processes to help mitigate their risk to fraud both on and offline. With the construction sector contributing £117 billion to the UK economy in 2019, 6% of the UK’s total economic output – it is not surprising that the industry is a valuable target to fraudsters, this is further exasperated by the view that the industry still operates largely offline with traditional procurement processes. The reality is that the continuing drive towards Building Information Modelling (BIM), automation and cloud-based management systems, exposes a sinister collaboration between cyber-criminal and fraudster.
For all construction firms, the risk of project delay due to fraud and cyber attacks can not only damage profitability but reputation and for an industry which relies on strong customer relations the risk to reputation could outweigh the financial loss.
Fraud includes a wide range of crimes such as forgery, credit scams, and insider threats, involving deception in order to commit theft. The risk to construction businesses is not just the immediate financial loss but in some cases businesses could receive third-party litigation if a data breach is deemed the result of inadequate safeguarding of information.
Top Service is now seeing more and more potential fraud being reported from bone-fide company details being used without their knowledge to fake companies being set up in an effort to obtain goods fraudulently.
The industry is becoming more and more frustrated with how fraud is dealt with and as the #1 credit reference agency for the construction industry, supporting our industry is really important to Top Service. Emma Miller, Managing Director at Top Service has the following advice: “Businesses can minimise their exposure to fraud but even with every possible check done, search carried out and every question being asked they should never ignore that gut feeling of ‘something just isn’t right’ because when something doesn’t feel right it usually isn’t! There are formal checks to carry out before providing goods on credit, most importantly, don’t just ask and record the details – check them.” Other suggested advice for businesses include:
- Confirm the details on credit applications are true, using credit information, the internet or ID checks
- Check the condition of the business applying for goods on credit
- Is the order consistent with past transactions or as expected?
- Satisfy that gut feeling, assess the risk and if needs be decline any credit application.
- Testing is also important. It will help to ensure new processes and current processes are providing the protection you need. Internally, submitting a fictitious order or application will help you to track if you are getting the desired outcome.
- Do not share third-party customer data,
- Educate staff on how to identify phishing emails and encourage them to report anything suspicious
- Reinforce the importance of setting good passwords and back up data regularly
For further information or support relating to fraud prevention or anything else relating to credit management please contact www.top-service.co.uk