Potential impact of Covid-19 on Bankers’ Blanket Bond & Commercial Crime Policies
Sandy Kapoor – Associate Director, Dubai Office
Here at ASL, clients have asked us about the potential impact of Covid-19 on Bankers’ Blanket Bond and Commercial Crime policies. Here are our thoughts on some of the factors that could lead to increased criminal activity.
- Easier employee infidelity – Less oversight and internal supervision if staff are absent or working from home, employees may have sole access to workplaces, fewer internal audits. Also, the general business upheaval and commotion as a result of the pandemic may create opportunities for dishonest employees tempted to steal from their employer;
- Inadequate procedures – Attempting to maintain ‘business as usual’ in the face of reduced demand and disrupted supply chains may entice employees and salespeople to cut corners, exceed their authority or break the law. From the Insured’s side, the rush to enable employees to work from home without having appropriate controls in place may mean that internal procedures are relaxed or ignored;
- Reduced physical security – Fewer guards on premises and less frequent physical checks on properties;
- Cyber – Numerous new scams and phishing / smishing (by text message) frauds have already been identified. From the UK police, for example: https://www.actionfraud.police.uk/alert/coronavirus-related-fraud-reports-increase-by-400-in-march. The FCA has also warned about loan fee fraud, good cause scams, investment scams and clone firms: https://www.fca.org.uk/news/news-stories/avoid-coronavirus-scams;
- Social engineering – Greater reliance on electronic communications and less face to face interaction increases the risk of social engineering scams;
- Economic downturn – Redundancies, temporary layoffs and consequential increased financial stress can drive more individuals to crime;
- Civil commotion and unrest – If lockdowns lead to civil unrest, ATMs and banks are frequent targets;
- Loans – Relaxation of loan criteria in order to help keep companies afloat may be taken advantage of by some to obtain loans fraudulently.