In financially challenging circumstances, it is perhaps no great surprise that people can resort to dubious means to survive. As such, data suggests a strong link between financial recessions and increases in criminal activity. It’s a correlation that is highlighted by a new guidance document produced by researchers at the University of Portsmouth. The researchers highlight that fraud, in particular, grew by 9.9% during the 1990 recession, and 7.3% during the 2008 recession. The researchers believe that if this trend is mirrored during the inevitable COVID-based recession, then fraud and cybercrime could increase by an incredible 60%.
"Economic pressures may lead people to radically re-evaluate loyalties and to rationalize behavior which, in normal times, they would not consider appropriate," the authors explain.
After studying the last three major financial recessions, the researchers found a clear correlation between economic turmoil and the rise in fraud and cybercrime. It’s a link the researchers believe is partly explained by the heightened financial pressure people are placed under, which prompts a [small] minority to resort to criminal means of extricating themselves from the situation.
The lockdown procedures implemented around the world to try and stymie the spread of the coronavirus are having a profound impact on the global economy. Tens of millions of people have registered as unemployed in the United States, and various commentators believe the economic fallout could last for a decade or more.
For instance, an analysis of the Australian economy suggests that up to 25% of the Australian workforce could be out of work as a result of the measures designed to halt the spread of the disease. The data was based upon work classifications that highlight the physical proximity workers are required to have with colleagues and customers. This renders workers in industries such as hospitality and leisure especially vulnerable, but the repercussions are likely to be wide-reaching.
As with so many economic shocks, the fallout from the coronavirus are unlikely to be felt equally across society, with research from the University of Cambridge highlighting that young people are disproportionately vulnerable.
The data found that just 30% of a typical young worker's job can be done from home, which is nearly half that of older workers, which places them at particular risk of unemployment.
“Our findings suggest that the immediate impact of the coronavirus downturn on workers has been large and unequal, with younger workers and those at the bottom of the income distribution hit hardest,” the researchers say. “In the long term, the economic shock caused by the pandemic is highly likely to increase inequality between young and old, between higher and lower earners, and between those on secure and insecure contracts.”
This matters, because as data from Flinders Criminology highlights, young people are more likely to engage in cybercrime than their older peers. The research shows that the internet blurs the social boundaries that exist in the real world, which can make it easier for people to engage in antisocial and criminal activities. With the recession providing a strong need for people to earn money in some way, the temptation can be significant.
Data from ActionFraud has shown a 400% increase in coronavirus-related cybercrime since the pandemic gathered steam in mid-February, with bogus websites and phishing emails common methods of conning people, often into buying protective equipment or tests for the virus. The researchers outline a number of steps they believe organizations can take to help protect themselves from attack.
- Understand their vulnerability to cybercrime, with the team developing a free Cybercrime Vulnerability Scorecard to help understand the risks organizations face.
- Protect their networks, while understanding that there is never any such thing as 100% protection.
- Build up sufficient capacity to respond to attacks as they happen, with a particular focus on having the skills and processes to respond quickly and effectively. The researchers advocate scenario-based training as a useful means of testing this capability.
- This capacity should also extend to being able to quickly investigate what has happened so that any damage and data loss is mitigated. Organizations should be aware that there is also likely to be a regulatory requirement to report any breaches, and a branding requirement to mitigate any reputational damage.
"The deep recession we face, if typical of past economic downturns, looks set to lead to a substantial increase in fraud,” the researchers say. “Possible economic pressures may also lead people to radically re-evaluate loyalties and to rationalize behavior which, in normal times, they would not consider appropriate. It is unlikely that any organization will be immune to these changes.”