FROM ECONOMIST INTELLIGENCE UNIT

As companies have increasingly used the Internet for electronic transactions, the risk of information theft has soared. Cybercrimes that involve the appropriation and misuse of personal and corporate identities and the theft of privileged data have dented consumer confidence in e-commerce and threatened corporate security. Nearly 9m individuals in the US suffered identity fraud in 2006, according to the 2006 Identity Fraud Survey Report, released by the US Council of Better Business Bureaus and Javelin Strategy & Research. The one-year cost of identity fraud is approximately US$56.6bn.

According to Complying with rules for identity management, a briefing paper prepared by the Economist Intelligence and sponsored by IdenTrust, nearly 40% of senior executives surveyed fear a security breach of their computer systems, while 32% worry about the theft of proprietary or competitive information. Based on interviews with 127 senior executives from large organisations and small and medium-sized enterprises (SMEs), the report found that more than 20% of respondents say they are “barely compliant” with regulations governing account authentication and “need a great deal of improvement”. In addition, more than 40% of respondents say they would increase the number of suppliers if they could authenticate their financial stability.

In the global corporate arena, companies are deeply concerned about identity authentication. About 67% of survey respondents say that they need to improve their organisation’s level of compliance with regulations such as account authentication rules that govern the global supply chain. Respondents say that designating authentication standards (33%) and integrating worldwide authentication options (29%) are the top two steps necessary to safeguard the global supply chain and ensure the safety of online commerce.

Although financial institutions are most vulnerable to identity theft, all companies are at risk. “All enterprises, not just financial institutions, must reconsider their identity authentication practices,” says Maxine Most, a principal at Acuity Market Intelligence, a Boulder, CO-based strategic marketing consultancy. “In a way, Internet crime has replaced petty crime. You can get information about individuals and organisations and use that to steal money. Why pull a gun at a convenience store when you can sit comfortably at home with a computer and steal?”

Government regulation of identity authentication has increased as a result of severe losses that businesses have suffered because of identity fraud. Compliance with new regulations is propelling global organisations to invest in a variety of identity authentication tools. Moreover, a large number of companies are using authentication technologies without regulatory pressure due to fears of cybercrime. Many identity authentication technologies answer the need for basic compliance, and each has its advantages and disadvantages. Multifactor authentication is the most secure method of verifying identities and the integrity of data. Of particular value is the use of PKI-based digital certificates with hard tokens, an approach that will be promoted by the US government and others as the preferred method in many regions of the world. However, each country is creating its own domestic PKI and, therefore, there is a lack of interoperability.

SOURCE: ECONOMIST INTELLIGENCE UNIT

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