White collar crime risk

Hiscox is warning businesses that rising unemployment could lead to an increase in white-collar extortion. Previous recessions and periods of economic instability have led to increases in extortion cases, particularly in sectors such as financial services.

While extortion can take a number of forms in the UK – occasionally involving physical threats to property or people – it is more likely to be targeted at a company’s product or service. A company reliant on its IT systems, such as a financial institution, might see a threat of a computer virus being introduced maliciously.

Well-educated, white collar workers with detailed knowledge of their ex-company’s IT and operating systems can occasionally turn to extortion as a way of taking revenge on a former employer and of making money.

Charlie Hanbury, Special Risks Underwriter at Hiscox, commented: “I would expect to see insurance claims from companies experiencing extortion go up by at least 25 per cent in the current downturn. Therefore, it is critical that organisations thoroughly examine and test their risk management procedures when it comes to dealing with incidents such as these.”