With slowing growth and rising inflation, the world economy looks set to experience rocky times ahead. Some economists are predicting we could soon face a global recession. Even if Australia escapes dipping into negative territory, most agree the next year is likely to be turbulent. But not every industry will be impacted by a recession in the same way. Some industries don’t contract during a recession. They actually expand.
According to historical experience, one sector likely to experience a boom during a recession is the cybercrime industry. It is safe to say that cybercrime is recession-proof. In this blog, we explore some of the implications a recession could have on cybercrime rates, and why it’s critical you continue prioritizing cyber-resilience, even when economic times are tough.
Cybercrime Increased During Previous Recessions
During the 2008-2009 Global Financial Crisis (GFC) and subsequent recession, researchers noted that cybercrime rates increased. Their report focused exclusively on financial cybercrime, including identity theft. It noted that financial cybercrime increased dramatically, in part thanks to the proliferation of new technologies to regions of the world with many poor people in possession of IT skills.
The combination of poverty and technical know-how facilitated an explosion in cybercrime opportunities. The onset of the GFC recession contributed to exacerbating the trend. And remember – that was over a decade ago!
In the meantime, the capacity to engage in cybercrime has skyrocketed, with a proliferation of new attack vectors, including many new malware variants. It is highly likely that in any future recession, cybercrime syndicates will scale up their operations to unprecedented levels, putting us all at greater risk.
3 Reasons Cybercrime is Recession Proof
1. Poverty Drives People to Cybercrime
Even if Australia escapes a technical recession, much of the rest of the world will likely tip into negative territory. For many people, particularly in the developing world, a global recession could literally mean starvation, or the inability to pay for life-saving medication.
And in an era of global cybercrime syndicates, the economic situation in West Africa, Eastern Europe, or South-East Asia could have a more significant impact on Australian cybercrime rates than our own domestic economic numbers.
Just take the situation in Cambodia. Following prolonged lockdowns as a result of the pandemic, including the shuttering of the country’s lucrative tourism sector, thousands of individuals who were desperate to earn a decent income ended up being forced to work in industrial-scale scam operations. The victims of these ‘fraud factories’ extended well beyond Cambodia. They targeted unsuspecting individuals around the world, using any tactics they could to deceive them out of their money.
Any global recession that further undermines the economies of developing nations will drive even more desperate people towards working for cybercriminals, thereby increasing the risk that people and businesses in Australia will be targeted.
2. Unemployed Often Become Money Mules
A recent survey found that one in 10 young people are willing to become money mules in exchange for cash.
Should Australia dip into a recession, and experience a rise in unemployment, many of those faced with financial difficulties could be tempted into acting as money mules as a way to make a quick buck.
A money mule is an indispensable cog in the cybercrime wheel. Many of the cybercriminals targeting Australians are based overseas. If they are going to successfully defraud Accounts Payable (AP) staff, then they need a local bank account into which the proceeds of their crimes can be deposited before the funds can be sent offshore, often through cryptocurrency.
That’s where the local money mule comes in. They offer the use of their Australian bank account in exchange for a fee. Sometimes, the money mule is recruited to the operation without even realizing they are actually working for criminals.
At a time of economic hardship, cybercriminals will be able to recruit more Australian money mules, enabling them to scale up their operations.
3. Constrained Cybersecurity Budgets
When many businesses are doing it tough due to a recession, there’s a strong temptation to look for ways to cut spending.
Many CFOs will be forced to trawl through every line item in the budget, looking for potential savings. Any non-essential expenditure that can be cut, or postponed, will be.
To some CFOs, cybersecurity expenditure may seem to be an area where potential savings can be found. After all, most expenditure on cybersecurity is aimed at preventing potential problems. That makes it hard to calculate its ROI.
However, during tight economic times, when cybercrime rates are likely to rise, cutting cybersecurity expenditure could end up being a very costly decision!
Investments in cybersecurity are cumulative. Organizations build up their resilience to cyber threats incrementally over time. When an organization starts cutting back on its cybersecurity program, it can take many years to build back up to the level of cyber-maturity it had before the belt-tightening.
Any minor savings achieved by cutting cybersecurity budgets could make your organization easy prey for cybercriminals right at the time when they are actively hunting for their next victim. You’d be cutting your defensive capabilities just as the cybercriminals are upping their offensive capabilities. Any budgetary savings could be dwarfed by your cybercrime losses.
How Can Eftsure Help?
As cybercrime rates increase during a recession, and budgets for defensive capabilities become constrained, organizations must prioritize those investments that provide the greatest benefit for the least cost.
We know that Business Email Compromise (BEC) is the most prevalent cybercrime variant in the world today. According to the FBI, BEC scams are the biggest money makers for cybercriminals globally, earning them over $2.4 billion USD last year.
This makes it highly likely that in a recession, cybercriminal syndicates will resort to more attempted BEC attacks than ever before.
With Eftsure sitting on top of your accounting processes, you can mitigate the risks of BEC by ensuring you only transfer funds to the intended recipient. You’ll receive real-time notifications to confirm that the bank account you are sending funds to is legitimately owned by the intended beneficiary.
Attempts by cybercriminals to manipulate the BSB and Account Number in supplier invoices, so you inadvertently send them the money, will not succeed.
At a time of recession, when cybercrime is up and budgets are tight, Eftsure protects you from the most common type of cybercrime sweeping the world.
Speak to us today for a demonstration of how Eftsure can protect you.
The Essential Cybersecurity Guide for CFOs
Understand the full range of cyber threats facing the modern CFO. It's the critical information you need to stay one step ahead of cybercriminals and prevent your organization from becoming a victim.
