Understanding Insider Risk in Financial Services

Insider risk is a critical concern for financial services, where breaches can lead to significant financial and reputational damage. This blog explores the complexities of insider risk and offers strategies for effective management.

The Changing Landscape of Insider Risk in Financial Services

The insider risk landscape facing the financial services industry is growing increasingly complex. Unlike other sectors, the financial services industry is distinguished by the direct access insiders have to capital, high-value data, and critical infrastructure systems. The combination of assets and data at stake exposes the financial services industry to an unusually wide range of adversaries, ranging from organised criminal groups and individually motivated insiders to highly resourced nation-states seeking systemic disruption.

External trends are amplifying internal risks. There is an increasing shift to hybrid and distributed workforces, which has reduced organisations' visibility over employee activity and behaviour. Additionally, the rise of AI-driven deception, including deepfakes, has made remote infiltration and social engineering attacks more convincing and harder to detect. Increased dependencies on third-party services broaden the attack surface, introducing insider risks that extend beyond direct employees.

Identifying Types of Insider Risks

Within the financial services industry, insiders pose a heightened risk due to the sensitive and high-value assets they can access. The cases we most frequently encounter involve employees exploiting access to sensitive information, such as personal data and account details, for financial gain through sale or misuse. Insider risk within the financial services is not only a data challenge. Insiders are increasingly abusing payment systems, loan approvals, or compliance processes to commit, facilitate, or conceal fraud.

From numerous assessments, we have identified three common types of insiders: the self-motivated insider, the unintentional insider, and the infiltrated insider. Self-motivated insiders are driven by personal gain, leveraging their proximity to financial instruments and sensitive data. Unintentional insiders are often targets of social engineering and phishing, unknowingly aiding in data theft and fraud. Infiltrated insiders, although less frequent, pose a significant risk due to their potential links to organised crime or nation-state actors.

The Role of AI and Deepfake Technology in Insider Risk

With remote work and virtual hiring becoming standard practices, the financial services industry faces a rising threat: deepfake infiltration. Fraudulent candidates use stolen and AI-generated identities to secure positions and gain access to sensitive systems. Once inside, they can facilitate the circumvention of sanctions, extract confidential data, enable money laundering, or disrupt operations, posing a serious risk of espionage, sabotage, and systemic financial crime.

For instance, research has shown that many deepfake hires can be traced back to North Korea. By leveraging identity theft and sophisticated obfuscation techniques, operatives infiltrate financial services institutions across Europe, North America, and Asia, funnelling hundreds of millions of dollars back to the regime. Beyond the immediate operational and security risks, the strategic and legal implications are significant. Financial institutions face regulatory scrutiny, sanctions violations, and reputational damage if found complicit in funding sanctioned regimes or failing to prevent criminal infiltration.

Practical Strategies for Mitigating Insider Risk

Conducting an insider risk assessment is a practical and effective way to measure how prepared an organisation is for insider incidents. Using the Signpost Six Control Framework, our assessment produces maturity scores (0–5) across nine key domains and highlights potential types of insiders and vulnerabilities. Benchmarking results against peers in your sector provides additional insights.

For any organisation, defining a clear risk appetite around insider risk is both a strategic necessity and a practical guide. It sets the boundaries for acceptable exposure to operational disruption, financial impact, reputational harm, and threats to employee safety as a result of insider incidents. With this clarity, leadership can make confident, forward-looking decisions while teams on the ground can implement safeguards that are both effective and proportionate.

Based on the results of the insider risk assessment, organisations should evaluate whether the findings align with their defined risk appetite. Where there is a clear lack of security measures and awareness around insider risk within the organisation, it is advisable to implement an insider risk program. The insider risk assessment includes a roadmap with concrete recommendations to mitigate the identified vulnerabilities and to increase the organisation's maturity to insider risk.

The Importance of a Holistic Approach to Insider Risk Management

The most common challenge across the financial services industry is the lack of a holistic approach to insider risk management. Insider risk management is often confined to isolated initiatives dedicated to data loss prevention or awareness. Without a holistic strategy that connects technical, physical, and human mitigation, risks that span multiple areas often go unmanaged.

Many financial institutions operate in functional siloes due to their size, leading to fragmented governance structures. Without centralised governance frameworks and broad organisational commitment, mitigation efforts fall short due to inconsistent policies, capabilities, or response procedures. This lack of cohesion hampers the ability to mitigate insider risk, especially when these cut across operational, compliance, and security boundaries.

To truly secure an organisation, it is essential to see what’s within. At Signpost Six, we combine behavioural science with security expertise to bring clarity to the unseen. Through our proprietary S6 Framework, we offer tailored solutions ranging from risk assessments and programs to insider risk awareness training. By empowering organisations to build trust, enhance resilience, and stay ahead of emerging insider risks, we aim to protect both the organisation and its employees.