Tag: Insider threats

Geopolitical Implications on Insider Threats in Europe

European nations have witnessed a rise in hostile actions from countries like Russia and China, which are actively engaging in espionage to weaken economic stability and gain technological advantages. Following Russia’s invasion of Ukraine, cyber-attacks and espionage activities surged, primarily targeting NATO member states and industries critical to national security.

Hostile nations aim to gather intelligence, steal intellectual property, and disrupt government operations. In particular, the defense, technology, and energy sectors have been vulnerable. Microsoft’s recent Digital Defense Report highlights the increase in phishing campaigns aimed at European defense organizations, often linked to geopolitical motives, such as intelligence collection related to Ukraine or other military activities. Cyber efforts are just part of this hostile strategy: infiltrating these sectors with real people is also part of their efforts.

Why they do it is simple, cyber attacks and insider threats can give adversarial states access to strategic information, critical technologies, and influence societal situations aimed at destabilizing regions.

Trends in Insider Threat Crimes

The insider threat landscape is constantly evolving, with crimes ranging from intellectual property theft to more complex espionage activities. According to CISA, insider threats now encompass a broad range of activities, including unauthorized disclosure of sensitive data, sabotage, and financial fraud.

Collusion between employees and external threat actors is on the rise, with increasing evidence of insiders being recruited by hostile nations or criminal organizations to steal proprietary information or enable cyberattacks. Recent data shows that insider threats have increased globally, with 68% of organizations reporting at least one insider threat incident in the past 12 months (CISA). The financial impact of these crimes is also significant, with the average annual cost of insider-related incidents now estimated at over €10 million for European companies.

How Background Screening Can Prevent Insider Threats

In this challenging environment, HR departments in these critical sectors play a crucial role in mitigating insider threats by identifying potential risks before individuals are granted access to sensitive information. Background screening is a critical tool in this process, helping businesses identify red flags such as fake credentials, criminal records, or prior incidents of fraud.

For industries facing espionage threats, particularly in defense and critical infrastructure, enhanced screening protocols can identify candidates with links to hostile nations or risky associations. By conducting thorough background checks, HR can help ensure that employees do not pose a security risk, reducing the likelihood of insider collusion with foreign adversaries.

In conclusion, the rise in insider threats in Europe, driven by geopolitical tensions and state-sponsored espionage, necessitates robust HR practices to protect organizations. Background screening is a vital component in safeguarding businesses from hostile actors seeking to exploit internal vulnerabilities. By incorporating these tools, European companies can significantly reduce the risk of insider threats and safeguard their assets and intellectual property from hostile influences.

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Trends in Infiltration by Foreign Agents

Over the past decade, there has been a notable increase in the number of foreign agents attempting to infiltrate companies in the West. These agents often masquerade as employees, contractors, or even business partners to gain access to critical systems and information. The tactics employed range from falsifying credentials and references to sophisticated social engineering attacks. Countries like North Korea, China, and Russia have been particularly aggressive in these efforts, leveraging state-sponsored hackers and operatives to penetrate corporate defenses. Moreover, these agents are not just targeting government contractors or defense-related companies. Any business with valuable intellectual property, customer data, or strategic information can become a target. The rise of remote work has only exacerbated this trend, as it becomes more challenging to verify the identities and backgrounds of remote employees and contractors.

Recent Similar Events

In addition to the North Korean IT workers, there have been several other notable incidents. For example, in 2020, a Chinese national working for a prominent U.S. semiconductor company was caught stealing trade secrets and attempting to transfer them to a Chinese competitor. In another case, a Russian operative was arrested for trying to bribe an employee of a U.S. energy company to install malware on the company’s network. These incidents highlight the diverse methods foreign agents use to infiltrate companies, ranging from straightforward theft of data to more complex schemes involving bribery and coercion.

The Growing Threat Landscape

The threat landscape is evolving rapidly, with foreign agents becoming more sophisticated and persistent in their attempts to infiltrate Western companies. The financial implications of such breaches can be devastating, ranging from direct losses due to theft of intellectual property to long-term damage to a company’s reputation and customer trust. For instance, the U.S. semiconductor company mentioned earlier faced not only the loss of proprietary technology but also significant legal and remediation costs. The company had to overhaul its cybersecurity protocols and invest heavily in damage control, impacting its market position and share value. As these threats continue to grow, companies must remain vigilant and proactive in their defenses. It’s no longer enough to rely on standard cybersecurity measures: organizations must also focus on the human element, ensuring that all employees, contractors, and partners are thoroughly vetted and continuously monitored for any signs of suspicious behavior.

Scaut’s Background Screening Could Have Prevented These Crimes

One of the most effective ways to prevent infiltration by foreign agents is through comprehensive background screening. Scaut’s background screening services are designed to identify potential red flags, such as inconsistencies in employment history, affiliations with hostile nations, and other indicators of potential risk. Had Scaut’s services been employed in the cases mentioned above, the infiltrators’ attempts could have been thwarted before they even began. By rigorously screening all employees and contractors, Scaut can help companies protect themselves from the growing threat of foreign infiltration.

Don’t wait for it to happen to you

In today’s globalized world, the threat of foreign agents infiltrating Western companies is more significant than ever. Companies must take proactive steps to safeguard their data and intellectual property, and background screening is a critical component of this defense strategy. With the right tools and vigilance, companies can protect themselves from these insidious threats and ensure their continued success in a highly competitive market.

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A Wave of Espionage The recent cases of spying in Europe are not isolated incidents but part of a broader pattern of state-sponsored intelligence activities. Countries such as Germany, France, and the UK have all reported attempts by operatives to infiltrate key industries and governmental institutions. These operatives often pose as employees, researchers, or business partners to gain access to sensitive information. One notable method involves the recruitment of local nationals or the exploitation of migrant diaspora, leveraging their access to sensitive sectors. Technology, military, and research sectors have been particularly targeted, given their strategic importance to national security and economic competitiveness.

The Consequences of Espionage The implications of such espionage are profound:

• Economic Impact: The theft of intellectual property can lead to significant financial losses and diminished competitive advantage for European firms.
• National Security: Infiltration within defense or government can compromise national policies and military strategies.
• Geopolitical Stability: Espionage contributes to distrust and tension between states, notably between China and the EU, impacting diplomatic relations.

The Importance of Employee Vetting The crux of preventing espionage lies in understanding and vetting who is employed within sensitive sectors. Traditional background checks might not suffice in the face of sophisticated espionage tactics. Here’s what needs to be enhanced:

• Comprehensive Background Checks: Extending beyond criminal records to include a detailed history of education, employment, and overseas travel.
• Continuous Monitoring: Implementing ongoing scrutiny of employees in sensitive positions, not just as a pre-employment formality but as a regular security measure.
• Education and Training: Equipping employees with the knowledge to recognize suspicious behavior and understand the value of the information they handle.
• Collaboration with Intelligence Agencies: Private sectors and national governments must work hand-in-hand to identify and mitigate threats.

Cases and Responses European responses have varied, with some countries taking aggressive steps to counteract espionage. For instance, the expulsion of suspected spies disguised as journalists or trade officials has occurred in several EU countries. Moreover, legislative reforms aimed at tightening foreign investment in critical sectors have been enacted to protect against covert information gathering.

The Bigger Picture While the focus is often on Chinese or Russian activities, it’s crucial to acknowledge that espionage is a tool used by many states. The goal for all responsible governments should not be to single out one country but to systematically enhance overall resilience against all forms of espionage.

A Stark Reminder The recent espionage cases serve as a stark reminder of the vulnerabilities that come from not fully knowing your employees’ backgrounds and allegiances. As Europe grapples with the dual challenges of maintaining open economic policies and protecting national security, the balance will increasingly depend on rigorous security practices at the human level. Understanding who works for you is not just about filling a position; it’s about safeguarding the future of your enterprise and your country.

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Be careful who you hire

When we look at the report by the ACFE organization, which monitored over two thousand cases of fraudulent activity where an employee stole from their employer, we confirm a fairly logical judgment. Newcomers and fluctuating employees pose a much greater danger to a company than long-term loyal employees.

On the other hand, if a dishonest person has been employed in a company for a long time, they often cause the employer much higher losses than a novice who is often caught early on. However, the report shows that more than a third of cases are caused by colleagues who have been with the company for less than six months. Therefore, it is important to place great emphasis on verifying the credibility of applicants during the recruitment process. Furthermore, with the SCAUT platform, verifying their history, credibility, or imposed sanctions is fast, automated, and convenient.

Statistics are not boring, but a warning

How will a useful background check from the SCAUT platform help you? It will provide you with verified information about potential employees, and then it’s up to you whether you allow them to work with cash, data, or decision-making processes.

The statistics of fraudulent cases indicate that many of them could have been easily prevented if more caution had been taken in the recruitment process.

• 21% of dishonest employees had a similar issue in their previous employments. Screening that verifies references and the applicant’s past could easily reveal such hidden information.
• 8% of perpetrators even had a criminal record that the employer was unaware of, thus providing fraudsters with open access to further damage.

SCAUT offers tailor-made screening packages for specific positions, which can uncover similar information that applicants may not boast about. And would you hire someone you find out is not honest with you?

It’s not just financial losses that are at risk

It’s no surprise that the ACFE statistics show that perpetrators in higher positions cause more damage than ordinary employees, often up to ten times more. However, the higher the position of the employee, the more other dangers there are to be wary of.

Did you know that according to surveys, up to 21% of applicants exaggerate their previous experience and about 12% lie about their education? An incompetent person can cause reputational or other significant problems for a company due to poor decision-making, and they may not even have an intention to harm.

The Manager package, which SCAUT uses for screening individuals with decision-making authority and access to confidential information, focuses precisely on verifying such information. Unfortunately, many HR professionals do not focus on this and instead blindly trust resumes and information from interviews. And there, one can hear all sorts of things…

Whoever doesn’t verify may cry

And now, the most important experience that all companies included in the statistics have taken away: a whopping 43% of them did not conduct any background checks during recruitment!

Those who focused on screening most commonly focused on:

• Employment history
• Criminal record
• Professional references
• Basic credit check

All of these checks are part of the services provided by the SCAUT platform. So take advantage of it and find out who you will really be sitting next to in the office.

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Three risks of missing a background check

If an employer does not properly vet a candidate, they may hire someone without the right qualifications and experience. And then the employer has to teach them what they claimed, unverified, to have known long ago.

The employer may also decide to say goodbye to a less-than-truthful colleague. Then again, they have to spend time and money looking for a new person. In the meantime, someone else has to take his job.

However, it can also happen that a candidate not only improves his/her classification and experience in his/her CV or tactfully keeps silent about some negative facts, but also applies for the position with the direct aim of harming others. To defraud the employer, to download a client database, to leak trade secrets, to gain unauthorized access to code, and to steal money.

Sure, it doesn’t happen every day. But it does happen. According to many statistics, the costs associated with insider threats are steadily rising. The cost of dealing with insider threats and attacks is in the tens of millions of crowns in the average organization.

And that is assuming nothing worse happens…

The attack threatens everyone

Even in our context, we have seen major attacks on the employer’s property and other interests from within. A telecoms operator’s client database was copied and sold fraudulently, a large amount of cash was stolen, gift cards embezzled, and internal information negligently (or even intentionally) disclosed that affected the company’s value on the stock market or in negotiations with an investor. Examples abound.

Do you think you are not at risk of such an attack because you are not a telecoms operator, a bank, or a large authority or fund managing billions in assets?

According to a survey by the U.S. Chamber of Commerce, retail stores face a greater threat from their employees than from thieves or “street” robbers. Yes, internal employees steal more on average than “outside thieves.” Sad but true.

Who’s to blame for the trouble?

Who is responsible for the fraudster getting into the company? Who should have checked him, who is responsible for the selection process? Who is to blame for the organization incurring tens or hundreds of millions in damages because it failed to vet a new employee?

In other words, who to punish for bad recruiting?

At first glance, there are several culprits:

• We can blame HR, which is responsible for recruiting
• We can blame the compliance officer or the security director because they should have supervised the employees better
• And if we have an external recruitment agency or headhunter helping us with recruitment, that’s also an ideal scapegoat.

But firing the head of HR, the compliance officer, or terminating an outside agency will not be fair or effective. And it won’t in itself prevent similar problems from recurring in the future.

The statutory officer is personally liable

The first responsibility for the proper functioning of any organization lies with those who run it. Statutory, member of the statutory body, director, CEO, member of the board of directors.

How should this somewhat general statement be understood in the context of vetting job applicants?

It is the responsibility of the management of the organization to decide whether they intend to address applicant screening in recruitment at all, what resources they will devote to it, and whether the staff responsible will have the capacity, tools, and capabilities to do so.

When an organization’s management underestimates the security of its staff or even resigns from vetting candidates altogether, the members of its statutory body put themselves at great personal risk. If this is judged to be a lack of responsibility in the exercise of their functions in breach of due care, they risk being held liable for any damage caused to the organization’s assets. And, in extreme cases, they may even be prosecuted.

Due diligence and background check

What does the somewhat archaic-sounding concept of “due diligence” mean in practice? Simply that a member of a statutory body or a member of an elected body is obliged to perform his or her duties with the necessary knowledge, due care, and loyalty. He or she must have sufficient information to make decisions and must put the interests of the organization ahead of his or her interests.

What if a member of an elected body fails to act with due care and the organization suffers damage? For example, the officer in question did not at all address the background checks of new employees, even though it must have been obvious to him that he was putting the company at great risk.

In such a case, the member of the statutory body shall be liable for the damage to his entire property. Cash, movable and immovable property, simply everything that he or she owns alone or together with someone else, e.g. a spouse. And that’s where the fun really ends.

Background check protects the employer and the statutory agent

Candidate background checks are an important element in protecting employer assets. And, by extension, the personal assets of whoever runs the company.

Certainly, not every insurance company, county, government office, school, manufacturing company, or business needs to screen its employees to the same extent. But at least a basic consideration of which job applicants an employer will screen, to what extent, in what manner, and using what sources of information and tools, should always be made by the statutory officer. This is the only way to adequately and consistently protect the employer’s assets and one’s own.

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