Cyber Insurance Isn’t Enough: Why You Still Need Strong Verification Controls

Why insurance isn’t enough

Policies often treat “funds transfer fraud,” “fraudulent instruction,” and “social engineering” as separate buckets, each with its own definitions, limits, and exclusions. If an employee is tricked into approving a wire, the loss may fall into a gray area rather than clear cyber coverage. Insurers also look closely at whether reasonable controls, like verification procedures, were in place and followed before deciding how to respond.

What finance teams should clarify

Sit down with risk, legal, and your broker and make sure you can answer:

·       Are BEC, vendor compromise, and payment diversion covered, and under which policy (cyber, crime, social engineering endorsement)

·       What sublimits, deductibles, and conditions apply specifically to fraudulent payments

·       Which controls (verification steps, email security, training) the insurer expects you to maintain

If you cannot clearly map a realistic wire fraud scenario toyour policy language, you should assume the outcome of a claim will be uncertain at best.

Why a verification tool is critical

Email filters and trainings help, but attackers design vendor and payment fraud to look routine inside your existing workflows. A dedicated verification tool like Conduit Security gives finance teams a repeatable, auditable way to:

·       Verify counterparties and bank details before high‑risk payments or changes

·       Standardize checks across AP, treasury, capital calls, and distributions

·       Produce evidence of strong controls if you ever do need to file a claim

For private equity, fund admins, and all financial institutions, where a single instruction change can move millions, this kind of tooling is the operational layer that turns “best practice” into default behavior.

How to move forward

·       Map where high‑value and high‑risk payments originate today.

·       Review your policies using concrete BEC and wire fraud scenarios.

·       Implement a verification platform that integrates with your finance workflows and enforces a consistent, auditable process.

Cyber insurance protects the balance sheet after a loss; verification tooling protects your cash so that loss never happens in the firstplace.

To learn more on this critical topic, please register forour upcoming webinar with Altus Partners on February 19^th.  Entitled “Bridging the Gap: Insurance, Technology, and the Rising Threat of Wire Fraud,” a panel of experts will go deeper on this problem. Designed for CFOs, controllers, risk leaders, and operations executives across private equity, asset management, real estate, and professional services, the session will walk through real-world claims and near-misses, how insurers evaluate wire controls, and what happens after a fraudulent wire goes out. You will leave with a concrete checklist of wire controls to prioritize, focused questions to take back to your insurance partners, and strategies to better align insurance, security,and finance so wire risk is actively managed - not just reacted to after aloss.

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