STORY:
Companies Could Lose Billions In Y2K Fraud

Report indicates Y2K engineers most likely culprits

A leading computer research firm has issued an advisory for companies to guard against potential thefts directly linked to year 2000 (Y2K) IT security failures. According to a recent GartnerGroup research report, vulnerable companies could lose billions of dollars. The likely perpetrator would be a highly skilled software engineer who has worked on Y2K remediation efforts and understands both computer systems and the underlying business processes.

According to the report-"Year 2000 and the Expanded Risk of Financial Fraud"-two pervasive but unrelated forces are converging to support this scenario. First, the world's financial systems have largely migrated to an electronically interconnected business model.

According to statistics listed in a press statement and released by the National Automated Clearing House Association, $11 trillion in electronic transfers occurred in the United States in 1998. Second, virtually every line of code, every interconnection, and every computer involved in this process will have been opened, tested and possibly changed to support Y2K remediation efforts.

"Given the enormity of the Y2K task, the vast number of people assigned to fix the problem, and the element of human foibles, it should come as no surprise that at least one significant theft will occur in the next five years," says Joe Pucciarelli, GartnerGroup analyst in a press statement "Y2K remediation, by definition, creates and increases the opportunity for theft and fraud. When you ask the king's soldiers to rebuild the king's castle, the royal army has more opportunity to steal."

According to the report, the worst-case scenario for theft would include a highly skilled software engineer involved with Y2K remediation who feels unrecognized or unappreciated. The opportunity for theft may occur when a system crashes unexpectedly and a single software engineer will make the changes without the normal reviews, due diligence and oversight. "The irony is that the person saving the day may end up pilfering the loot," added Pucciarelli.

Source: Business Wire

DATE: 07/19/99

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