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Tuesday, March 15, 2011

The Case for Cybersecurity Insurance, Part I

In very few of the many stories Ive written about online banking fraud against businesses has insurance paid for much if any of the losses victim companies suffered. However, several victims Ive interviewed in recent incidents did have cybersecurity insurance coverage bundled as part of larger business risk insurance policies. In each case, the businesses suffered fairly substantial thefts, and appear likely to recoup all of their direct financial losses.
The most recent incident involved Golden State Bridge Inc., a Martinez, Calif. engineering and construction company that builds bridges. The thieves used an extremely stealthy but as-yet-unclassified strain of malicious software to steal the companys online banking credentials, and on May 19th, the crooks used that access set up a series of fraudulent payroll payments totaling more than $125,000.
Initially, the attackers set up two batches of automated clearing house (ACH) payments one for $50,000 and another for $75,000 effectively sending a series of transfers to a dozen different money mules, willing or unwitting individuals lured into helping the criminals launder stolen funds by wiring the funds overseas and taking a small commission (usually 8 percent) for themselves.

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