Insider Fraud: Ignore It at Your Own Risk

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January 28, 2025    

Earlier this week, the British Museum in London faced unexpected disruption when a former contractor disabled the museum’s IT systems, partially shutting down the institution. A message on the website that day said the museum was open “but due to an IT infrastructure issue, some galleries have had to be closed.”

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The museum disruption highlights the risks posed by disgruntled employees and raises concerns about access rights after employment ends. It is a classic case of HR mismanagement. If HR had been informed about the contractor’s exit, immediate steps should have included suspending payroll and revoking the employee’s physical and system access. Even if the person was a contract employee, the process would still have ultimately involved HR. At some stage, HR should have received either a resignation or termination letter, triggering these critical actions.

Every month, cases of insider fraud make headlines, but unlike high-profile cybersecurity incidents, they get less attention and public discussion. Organizations tend to prioritize defending against what they believe to be the primary threat. But insider fraud is not only a common problem across all industries but it also can be particularly damaging because it comes from individuals already trusted with access.

For example, a few weeks ago, bank staffers in the U.S. were accused of selling client data in backdoor deals with online fraudsters – helping to facilitate sophisticated scams.

Insider fraud and negligence remain the most underestimated cybersecurity risks, even as these threats account for significant losses worldwide. According to the Association of Certified Fraud Examiners, the median loss per insider fraud case increased by 24% between 2022 and 2024. The same report states that roughly 42% of fraud cases involve employees exploiting their positions.

Access Management Failure Points

The British Museum incident highlights several common weaknesses in handling insider risks. Despite no longer associated with the company, the contractor still had access to the museum’s IT systems.

Even worse, businesses usually end up giving more-than-required privileges to contractors or third-party vendors without subjecting them to rigorous monitoring. As per IBM’s 2023 Cost of a Data Breach Report, organizations with continuous monitoring detect and contain threats 27% faster.

Mitigating Insider Threat

Combining technical tools with proactive human risk policies, such as thorough background checks, is essential to mitigating these risks effectively.

Artificial intelligence has the transformative potential in monitoring insider threats in real time. Modern AI-driven systems offer organizations unparalleled capabilities to identify unusual patterns, behaviors or anomalies that could indicate malicious or negligent insider activities.

But AI integration must be accompanied by strong governance, ethical use policies and regular audits to maintain trust and compliance with privacy regulations, said Raina Verma, associate vice president of global risk and custody at a wallet infrastructure institution. “When combined with human-centric strategies like background checks and human risk policies, AI serves as a powerful tool in creating a robust defense against insider threats,” she said.

Fraud practitioners will benefit a lot by following the principles of zero trust that enforces continuous identity verification and limits access based on user roles and behaviors. Automation can also play a big role. By prioritizing robust offboarding processes, continuous monitoring and access controls, organizations can mitigate insider fraud risks. Ignoring these vulnerabilities not only exposes businesses to financial losses but also undermines trust and operational stability. The British Museum incident serves as a reminder that insider threats are real and increasingly common and require proactive attention.