Euro presents new opportunities for IT fraud

Citation

(1998), "Euro presents new opportunities for IT fraud", European Business Review, Vol. 98 No. 6. https://doi.org/10.1108/ebr.1998.05498fab.002

Euro presents new opportunities for IT fraud

Euro presents new opportunities for IT fraud

New research from GartnerGroup highlights financial risks for companies preparing for the new European currency

The move to a single European currency with the introduction of the Euro on 1 January 1999 is a major opportunity for IT fraud, according to new research from the GartnerGroup. Many European organisations, who are preparing their IT systems for the Euro at the same time as for Year 2000, face a substantially increased risk of financial loss from both inadvertent errors and intentional computer-related fraud.

According to the research, the risks are caused by three special characteristics of Euro compliance solutions:

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  The vulnerability of solutions ­ Euro compliance can involve changes to a number of operations including currency conversion and rounding, all areas where fraud has been successfully perpetrated in the past. These changes will also affect a large number of computer systems, increasing the scope for potential fraud. All of this, coupled with the fact that many companies will be implementing solutions over a period of time, working in a mixture of Euro and local currencies until 2002, means companies could be at risk for an extended period.

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  The use of external staff ­ the size and scope of many of the ongoing projects is forcing companies to rely heavily on external staff who may not be subject to the same rigorous security checks as internal employees. With IS departments, especially in the financial services sector, not having the internal resource to review all deliverables, there is the potential for both code and data-related crime.

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  The difficulty in identifying fraud or errors ­ as staff will not be familiar with the Euro, they could find it difficult to recognise a potential fraud or an error and are more likely to miss discrepancies. This lack of familiarity could also encourage people to perpetrate fraud as it will not only be harder to distinguish between crime and genuine mistakes ­ it will be harder to prove.

Said Nick Jones, research director and vice president at GartnerGroup Europe:

This research highlights what needs to be a serious concern for companies who are implementing Euro compliance solutions. They need to review their security, audit and fraud prevention practices as well as look at ways to minimise any potential risk through education of staff, procedural changes and rigorous internal testing of their compliance solutions.

Founded in 1979, with headquarters in Stamford, USA, GartnerGroup is at the centre of a global community of more than 11,000 client organisations served by analysts in 80 locations worldwide. GartnerGroup's unique capabilities and resources help bring clarity to the direction of the world's hottest and most volatile industry. More information on GartnerGroup can be found at http://www..gartner.com

For further information and a copy of the research note, please contact Emma-Louise Clark, Text 100. Tel: +181 242 4158; E-mail: emmac@text100.co.uk or Heather Malley, Text 100. Tel: +181 242 4109; E-mail: heatherm@text100.co.uk