Weathering the Storm: Climate Risk Stress Tests
Extreme weather has always meant extreme risks for businesses and investors. Yet climate change has varied the calculus, and many businesses are facing new, potentially existential risks as the world and the energy transition heat up. As such, central banks and financial supervisors have begun conducting climate risk stress tests, to ensure these institutions are capable of mitigating the potential impacts of a changing climate. But what do these tests entail, which markets have been the most proactive in conducting them, and what exactly is 'climate risk' anyway? On today's show, Tom Rowlands-Rees is joined by Tifenn Brandily, BloombergNEF's head of transition risk and alignment, and special guest Edo Schets, Bloomberg's head of climate, nature and regulatory financial solutions, to discuss findings from the note 'Climate Risk Stress Test Review'.
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Entrepreneur
28 minutes ago
- Entrepreneur
The Role of Banks in Preventing Fraud
'Unusual activity detected in your account. Immediately open this link to verify your identity.' You're on the verge of clicking the link when you remember reading an alarming article about... This story originally appeared on Due 'Unusual activity detected in your account. Immediately open this link to verify your identity.' You're on the verge of clicking the link when you remember reading an alarming article about identity theft. Suddenly suspicious, you call your bank to confirm the email's legitimacy. Congratulations! You just participated in one of the many layers of fraud prevention that financial institutions implement to protect their customers' finances and sensitive information. Banks are a fraud-fighting army, working behind the scenes to safeguard every tap, click, and swipe you make during online transactions. 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These incentivize financial institutions to treat fraud prevention as a vital business imperative. The Rising Threat of Digital Fraud Fraudsters continue innovating in response to increasingly stringent cybersecurity systems and strategies. As a result, social engineering threats that rely on manipulation rather than technical attacks have increased. Scam-Yourself Attacks The third quarter of 2024 saw a whopping 614% increase in command prompt scams, where people unwittingly install malware through fake software tutorials. A recent threat actor, NGate, is a type of spyware that records screen activity, a channel used by over 166% of cybercriminals. This virus emulates payment card details, which malicious actors use to make withdrawals or purchases. Another popular digital fraudster tactic is phishing attacks, which trick account holders into revealing sensitive information through emails or phone calls. These scams often create artificial urgency, claiming your account is in danger or you've received some money and must act immediately to avoid problems or loss. Americans above 60 are most vulnerable to this deception, probably due to their accumulated wealth and savings. Then, there's smishing — SMS scams that impersonate your bank or other credible institutions. These messages often ask you to click a link or call a number, leading to credential theft or unauthorized transfers. According to the Federal Trade Commission, these text-based scams accounted for $330 million in reported losses in 2022. The proliferation of deepfake audio and video is the new frontier of these challenges. Sophisticated AI tools can clone voices or create realistic video calls that trick even vigilant customers and support teams into revealing sensitive information. Strategies like voice-print analysis and liveness checks—asking customers to blink or rotate their heads—are viable tactics to combat these tactics. Card-Not-Present Fraud As physical card security improves thanks to chip technology, hackers are innovating online where physical cards aren't necessary. Banks thwart trends like card skimming through: 3D Secure protocols that add authentication steps for online purchases. Virtual card numbers for online shopping that limit the exposure of your real account details. Transaction limits for online purchases. Verification steps for adding new payment methods to online accounts. These measures create additional hurdles for fraudsters using stolen card information for unauthorized purchases. How Banks Detect Fraud Before You Do Banking fraud detection has evolved dramatically from manual reviews to sophisticated automated systems. 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This data includes customer records, transaction histories, and authentication logs. By layering encryption at multiple levels, financial institutions create redundant safety nets, making unauthorized data access exponentially harder. 2. Identity Verification Beyond Passwords Passwords are an increasingly ineffective line of defense. Most banks now use multifactor authentication to counteract credential theft. This method combines your login credentials with a one-time code on your phone or a fingerprint or facial scan to authenticate your identity. Behavioral biometrics takes verification a step further. Instead of asking for a fingerprint, software can analyze how you type, swipe or even hold your device. These unique patterns are nearly impossible for fraudsters to replicate, adding a hidden layer of protection around your account. Your bank may also use out-of-band verification if you need to reset your password. That might mean sending an SMS to your registered number and asking you to confirm a code, or triggering a push notification on your mobile app. These extra steps ensure that only you can make critical changes as a genuine account holder. 3. Real-Time Fraud Detection — How AI Keeps Watch Banks process millions of transactions per day. For instance, the Bank of America app alone had almost 1 billion digital client logins in July 2022. Manually reviewing every one would be impossible. Instead, they rely on artificial intelligence and machine learning models that spot real-time anomalies. These AI systems learn your spending habits: Where do you shop? How much do you typically spend? When do you usually buy things? When a transaction deviates significantly from your usual pattern — for example, a large overseas purchase — the system flags it for further review. Within milliseconds, the bank will send you an alert or request additional authentication. 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Unusual cash withdrawals, frantic customers who insist on skipping standard procedures, or mismatched identification documents can prompt a live agent to pause the transaction and verify details. In digital channels, fraud investigators review cases flagged by AI. They analyze transaction histories, account profiles, and device information to determine whether an alert represents legitimate activity or fraud. Investigators can freeze the account, reverse transactions, and coordinate with law enforcement if these checks confirm fraud. 6. Consumer Awareness Is Crucial in Staying Safe You're the first line of defense against fraud. Even the best bank security can't protect you if you overlook a red flag. Check your account activity regularly — daily, if possible. Many banks offer customizable alerts for international charges or transactions above a specific threshold. Use a reputable password manager to generate and store unique credentials for all your financial accounts. 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How to Integrate Fraud Prevention into Your Daily Routine Maintaining a secure financial life doesn't require constant tech know-how. Simple habits can dramatically reduce your risk exposure. Begin by setting up real-time push notifications for all transactions. When you receive an alert, immediately review the details. This habit transforms you into an active participant in fraud detection rather than a passive observer. Next, periodically audit your linked accounts and permissions, including external payment apps, investment platforms, and subscription services. Revoke access for obsolete or unused apps — a smaller footprint means fewer entry points for fraudsters. Consider using virtual or disposable cards for one-off online purchases. These card numbers automatically expire after a single transaction, nipping card-not-present fraud in the bud. Many banks now offer this feature within their apps, creating a dynamic number that changes with each purchase. Finally, customer support calls should be treated like mini security drills. When the outreach team asks about a suspicious transaction, observe how they verify your identity. These practices give insights into the bank's fraud protocols and show you what information scammers might try to extract. Predicting Future Innovations in Fraud Prevention Banks never rest in their mission to eliminate fraud. Which next-generation technologies are on the horizon? Quantum-resistant encryption: As quantum computing advances, current encryption methods may become vulnerable. Financial institutions are researching quantum-safe algorithms to stay ahead of the curve. Continuous authentication: Instead of one-time identity checks, banks explore systems that analyze user behavior throughout each session, detecting real-time anomalies. Decentralized identity solutions: Blockchain-based identity systems promise an additional layer of privacy and control, allowing you to share verified credentials without exposing personal data. Collaborative intelligence networks: Banks form secure data-sharing alliances to pool anonymized fraud patterns and attack signatures. By comparing notes in near real time, institutions can spot emerging scams faster than any single bank acting alone. Enhanced mobile security: With mobile banking representing most digital interactions, banks are embedding app-level firewalls, containerizing sensitive functions, and using encrypted offline storage for credentials. This technology reduces the risk of malware and unauthorized access on your device. The Last Line of Defense — You Banks have a suite of cutting-edge tech and expert teams ready to stop cyber criminals in their tracks — but your vigilance is a component of this success. Stay informed about threats, use unique and hard-to-guess passwords, and promptly report suspicious activity to create the strongest possible defense against fraud attempts. Featured Image Credit: Photo by Tara Winstead; Pexels The post The Role of Banks in Preventing Fraud appeared first on Due.
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