Category Archives: Fraud & Integrity Risk

The Real Insider Risk? It’s Broken Promises, Not Broken Firewalls

Posted on by
Reply

Paul Curwell

5 minutes

3 Key Takeaways

  1. Most insider risk comes from disengagement and broken promises that breeds complacency.
  2. Every employee has a written employment contract — and an unwritten psychological contract. Leaders break the latter by tone, decisions, and neglect, destroying compliance, IP protection, and security culture.
  3. Fixing insider risk is a leadership and culture job: rebuild trust, design human-centred security, and make psychological safety non-negotiable.

When Everyday Shortcuts Turn Into Insider Incidents

Let me start with something I’ve seen more times than I care to admit. Picture a mid-sized Australian tech or engineering business. Solid team, tight deadlines, not enough hours in the day. One of the long-serving employees — let’s call him Sam — quietly stops using the secure file transfer process because it slows everything down. He’s not trying to cause trouble; he’s just trying to keep up.

Over time, that workaround becomes the “unofficial way we do things.” No one corrects it, and Sam assumes it’s fine — until a contractor’s system gets compromised and sensitive design files leak. Suddenly a behaviour that once looked harmless triggers a full-blown insider incident.

This is exactly how most insider events begin in SMBs: not with a malicious actor, but with a frustrated, overloaded employee taking the path of least resistance because the environment around them makes compliance feel optional.

Worker mistreatment: The hidden threat to your business

Insider Incidents Hit Business Where It Hurts

The Australian numbers back what many of us see on the ground. Insider risk isn’t a fringe problem — it’s now one of the core business risks facing high-tech SMBs.

The OAIC recorded 1,113 data breaches in 2024, the highest since mandatory reporting began — and 30% were caused by human error, not hackers.¹ Another 5% came from malicious or rogue insiders.¹

And when these incidents involve knowledge leakage or sensitive IP — the kind of material SMBs rely on — the average cost is US$2.8 million per incident (~AU$4.2 million).⁶ That’s not theory; that’s the financial reality for knowledge-intensive organisations when someone bypasses a process, uploads the wrong file, or shares information through an insecure channel.

Insider risk isn’t just a cybersecurity issue. It’s a direct business cost — lost trade secrets, disrupted projects, contract delays, and expensive remediation.

Hiring From Competitors? You Could Be One Lawsuit Away from a Legal Nightmare

Insider Risks Rise When Psychological Contracts Break

Here’s the part leaders don’t always see — and in my 20 years of dealing with insider risk, it’s the uncomfortable truth that makes all the difference.

Complacent employees don’t disengage instantly — they fade. Insider risks don’t start with bad intentions. They start with small cracks in the relationship between people and leadership. When workloads become unsustainable, communication dries up, people leaders get overloaded, or priorities shift without explanation, employees don’t lash out — they withdraw. They get quieter. They worry about their future. And eventually, they look after themselves first.

The psychological contract breaks long before the written one. This unwritten agreement — built from tone, fairness, growth opportunities, and leader behaviour under pressure — dictates whether people follow processes willingly. When it breaks, employees stop going the extra step. They cut corners. They tune out. And that’s when insider incidents begin.

In other words: insider threats don’t emerge in a vacuum. They emerge when the workplace environment makes compliance feel difficult, unrewarded, or irrelevant.

What Leaders Can Do (Four Practical Moves)

Insider risk management isn’t a technical challenge — it’s a leadership discipline. Technology helps identify where problems are bubbling, but it can’t fix the human root cause. Here’s how to turn the tide:

  1. Create Psychological Safety
    People need to feel safe admitting mistakes, raising concerns, and reporting anomalies. If teams fear judgment or consequences, they will stay silent — and silence is where insider incidents hide.
  2. Design Human-Centred Security
    Controls must actually work in the flow of real work. If security friction becomes overwhelming, people will bypass it. Middle managers must be involved in redesigning processes so controls support productivity, not fight it.
  3. Lead Through Uncertainty
    During restructures, cost pressure, AI disruption, or operational change, employees look to leaders for meaning and direction. Clear communication prevents fear-based behaviours that increase both accidental and malicious insider risk.
  4. Rebuild the Psychological Contract
    This isn’t about perks — it’s about predictability, fairness, respect, and care. People need to see a path forward, feel valued, and believe leadership behaviour matches the organisation’s stated values. When the psychological contract is healthy, compliance becomes natural — not forced.
6 steps to improving security and integrity culture in the workplace

Conclusion

Most insider risks don’t rise because employees suddenly become untrustworthy. They rise when leadership, culture, and work conditions drift in ways that make compliance harder, not easier.

If we want to reduce insider events in Australia’s high-tech SMB sector, adding more controls isn’t enough. We need to understand the human dynamics that cause people to break them — often unintentionally.

And that starts with leaders.

Further Reading

Traditional Fraud Controls Catch Thieves. Oceans Eleven Catches You

Posted on by

Paul Curwell

5 minutes

3 Key Takeaways

  1. Traditional fraud and security programs focus on unorganised threats — the opportunists — while missing the organised adversaries that cause the biggest losses.
  2. Organised threats are networked, well-resourced, and adaptive. They operate across cyber, physical, personnel, and supply chain domains — not in silos.
  3. Intelligence converts unknowns into knowns — turning surprise into foresight and letting prevention and detection systems actually work.

“If your controls only handle what you understand, you’re not managing risk — you’re babysitting it.”

Why You Should Care About Organised Threats

Most corporate risk, security, and fraud programs are built to stop mistakes and misdemeanours — not missions. They’re optimised for the unorganised: The opportunistic employee who pads an expense claim, the petty thief stealing tools, or the scammer testing stolen cards. These are important, but they’re predictable. Controls handle them well because the patterns are known.

But that’s not where the real damage comes from.

Organised threats cause disproportionate harm

  • According to the ACFE’s 2024 Report to the Nations, fraud involving collusion or organised groups costs 4.5x more per case than solo incidents.
  • In the Sinovel Wind Group case, insider collusion led to over US$800 million in losses and wiped out more than 90% of the victim’s market value.
  • The HMS Bulwark fuel theft showed how diversion and timing — not technology — enabled a successful supply chain attack.
  • In contrast, the Los Angeles rail thefts were chaotic, opportunistic, and noisy — classic unorganised crime.
Los Angeles rail hijackings – a form of cargo theft

When customers or investors see a business lose control of its people, IP, or supply chain, the damage isn’t just financial — it’s trust erosion. Customer attrition and revenue loss follow fast.

“Organised threats don’t just steal assets. They steal confidence. They erode trust.”

Theft of fuel from HMS Bulwark – a diversion case study

Organised vs Unorganised Threats: What’s the Difference?

Unorganised threats cause events. Organised threats run campaigns. The first can be prevented through policy and detection; the second requires intelligence and coordination across all of your organisational silos – cyber, physical, personnel, supply chain.

Here’s how I explain it to boards and executive teams:

AttributeUnorganised ThreatsOrganised Threats
NatureOpportunistic, spontaneousPlanned, resourced, intent-driven
ActorsLone individuals, careless insidersNation-states, organised crime, colluding insiders
MotivationQuick gain, revenge, convenienceStrategic advantage, market share, economic or political goals
MethodsLow-tech theft, simple fraud, random phishingMulti-vector campaigns (cyber, physical, human, supply chain)
VisibilityHigh — noisy and frequentLow — covert, long-term, adaptive
ExampleLA rail cargo theftSinovel IP theft,
HMS Bulwark fuel diversion
ResponseControls:
deter, delay, detect		Effects:
disrupt, deceive, degrade

What This Means for Fraud and Security Management

Most organisations still treat all threats as equal. They’re not.

Traditional programs focus on known knowns — the incidents you’ve already logged, investigated, and wrapped controls around. That’s compliance work, not intelligence.

Paul Curwell (2025). The relationship between awareness, understanding and strategy.

The intelligence function focuses on what sits beyond that — the known unknowns and unknown unknowns. Its job isn’t to “map indicators”; it’s to define typologies — the organised patterns of behaviour, relationships, and methods adversaries use to achieve their goals.

The goal is to move as many threats as possible into the green quadrant – the known knowns – where we can effectively do something about them.

Controls stop incidents. Typologies stop campaigns.

Typologies, as I wrote in Typologies Demystified, give structure to complexity. They let analysts anticipate how campaigns evolve, recognise early warning signs, and help operational teams detect activity before loss occurs.

When intelligence and operations work together, the result is a living system:

  • Prevention and detection stay tuned to the latest typologies manifested by threat actors.
  • New patterns and lessons learned from investigations and near misses feed back into intelligence and fine-tune deteciton models.
  • Intelligence continuously converts “unknowns” into “knowns” that your detection systems can handle.

That’s how you evolve faster than the adversary and become a harder target.

“Typologies” Sound Boring – But They Could Save Your Business Millions

Next Steps: Turning Insight Into Action

  1. Map your critical assets and dependencies.
    Identify what truly matters — your IP, R&D, manufacturing data, key suppliers. Organised adversaries target strategic assets, not just endpoints.
  2. Break your silos.
    Integrate physical, personnel, information, cyber, and supply chain teams into one view. Threats don’t care about your org chart.
  3. Develop typologies, not checklists.
    Use intelligence to describe how organised fraud, supply chain attacks, or insider threat campaigns actually unfold. Then train teams to detect those typologies.
  4. Feed intelligence into prevention and detection.
    Your fraud and insider threat controls should update dynamically from intelligence insights — not just audits or annual reviews.
  5. Disrupt early.
    When you spot signs of planning, recruitment, or reconnaissance — act. Raise costs for adversaries before they launch their campaign.

You can’t automate curiosity — but you can operationalise intelligence.

Further Reading

DISCLAIMER: All information presented on PaulCurwell.com is intended for general information purposes only. The content of PaulCurwell.com should not be considered legal or any other form of advice or opinion on any specific facts or circumstances. Readers should consult their own advisers experts or lawyers on any specific questions they may have. Any reliance placed upon PaulCurwell.com is strictly at the reader’s own risk. The views expressed by the authors are entirely their own and do not represent the views of, nor are they endorsed by, their respective employers. Refer here for full disclaimer.

How to Enhance Detection with Comparative Case Analysis

Posted on by

Paul Curwell

6 minutes

3 Key Takeaways

  • Comparative Case Analysis (CCA) isn’t just theory — it’s a practical method to connect the dots between trade secrets theft, fraud, insider threats, and supply chain abuse.
  • You don’t need a huge internal dataset — competitor incidents and cross-industry cases provide the patterns and behaviours you need to build robust typologies.
  • CCA creates tangible business value — done properly, it turns messy case data into insights that protect revenue, IP, and operational continuity, making you look good to management and investors.

What is Comparative Case Analysis?

Most companies already have clues sitting in plain sight — case files, legal documents, media reports, competitor incidents, industry analyses. But they rarely connect the dots. If you don’t connect the dots, you can’t detect threats early, which means losses escalate, your IP gets compromised, and supply chain integrity suffers before anyone even notices.

Comparative Case Analysis (CCA) fixes this. It might not show up in glamorous keynote speeches, but it gives you practical leverage: more accurate detection, fewer false alarms, and stronger business protection. If revenue protection, IP protection, and supply chain integrity matter to you (spoiler: they should), then this is your toolkit.

Comparative Case Analysis means taking several instances of risk events (fraud, IP theft, insider threat, etc.), comparing them systematically, extracting patterns, signatures, and behaviours, then using those insights to write typologies which are used to build detection mechanisms. It’s the bridge between one-off incidents and repeatable defence.

Even if your organisation is small, you can pull from competitors or other industries — because threats are surprisingly consistent.

Why Comparative Case Analysis Matters for Business

When you get CCA right, two big things happen:

  • Earlier detection – You start recognizing threats before they inflict material damage.
  • Higher accuracy & efficiency – You reduce false positives and false negatives, which means fewer wasted resources and more trust in your detection systems.

That opens the door to greater automation and AI usage. If you understand which threats matter and how they appear in your data, you can lean more on rules engines, models, or anomaly detection — meaning you don’t need huge analyst teams fire‑fighting all day.

The business value isn’t theoretical: avoided losses, protected IP, preserved revenue, fewer disruptions in your supply chain. Plus, when management or investors ask, you’ll have solid proof you’re not just “winging it.”

We often overlook criminology when combating insider threats, fraud and sabotage

The Comparative Case Analysis Value Chain

Here’s the refined flow I use (and teach):

Threats → Risk Events (cases) → CCA (comparison) → Typologies (including patterns, signatures, behaviours) → Detection = Business Value

If any link is weak, the value drops. If all are strong, you build a resilient, measurable defence.

How to Actually Do It (Step‑by‑Step)

Here’s the practical method I use. If you follow this, CCA becomes repeatable, grounded, and useful:

  1. Define your scope
    Decide which type(s) of threats matter most to you: IP theft, insider risk, supply chain fraud, etc. Also decide down to the industry, product, or technology level.
  2. Collect cases
    Pull from internal cases (incidents, near misses), competitor incidents, public legal filings, academia, and media. If you don’t have five useful internal examples, don’t worry — competitor- or cross‑industry cases are totally valid.
  3. Standardise the data
    For each case, capture things like: who, what, when, how, impact, what failed controls, what signatures/behaviours were present.
  4. Compare systematically
    Lay out your cases side by side. Look for recurring behaviours, misused access, insider‑outsider collusion, process failures. Don’t assume everything is causal — test what appears consistently.
  5. Extract typologies
    From those recurring behaviours/patterns, build your typologies: the defined set of patterns, signatures and behaviours that will become your detection requirements.
  6. Validate & test
    Apply typologies to fresh data or unseen cases. Measure whether you catch real threats and don’t swamp people with false positives. Refine aggressively.
  7. Monitor performance
    Track detection speed, false positives/negatives, cost of investigation vs. savings, and measurable risk reduction. If you’re not seeing clear value, revisit your typologies.
  8. Peer review
    Get someone not involved in your collection or initial comparison to critique: did you miss patterns? Are your assumptions reasonable?
  9. Evaluate reliability
    Are your detection rules trustworthy enough to rely on with minimal oversight? If not, iterate.
  10. Refresh regularly
    Threats evolve. You should revisit your typologies and the chain every year (or more often in fast‑moving tech sectors) to stay relevant.
“Typologies” Sound Boring – But They Could Save Your Business Millions

Real Case Examples to Learn From

Comparative Case Analysis might not win design awards, but it wins business protection. It turns messy case files into sharp detection requirements. Do it right, and you get fewer losses, protected IP, stable revenue, and less headache from the security/fraud team. For example:

  • Trade Secret Theft in Medtech: A departing engineer at a medical device company copied proprietary 3D printing designs for a new implant. The designs appeared at a competitor two months later. Compare the methods used to extract the IP, the timing, and which controls failed — then ask yourself: could this happen in your organisation?
  • Supply Chain Fraud in Electronics: Danish authorities recently discovered unlisted components in circuit boards purchased from overseas, intended for use in green energy infrastructure. The parts could have been exploited to sabotage operations in the future. Compare the tactics and controls in place — quality checks, supplier audits, component verification — and assess whether your supply chain could be similarly vulnerable.
  • Insider Threat in Critical Infrastructure: A disgruntled employee at a water utility sabotaged Operational Technology at pumping stations so they would fail five days after he left the business. Compare the patterns and tactics used, as well as which controls worked or failed. Then use this to assess your own business: could this happen to you?

These examples demonstrate that threats are not isolated incidents but part of broader patterns that can be identified and mitigated through CCA.

Call to Action

If you’re a risk or compliance leader whose business is exposed to these sorts of threats, you need to ask whether your team is conducting Comparative Case Analysis as part of continuous improvement. Are you systematically comparing incidents to identify patterns? Are you using these insights to write typologies that inform your detection mechanisms? If not, it’s time to start.

Further Reading

DISCLAIMER: All information presented on PaulCurwell.com is intended for general information purposes only. The content of PaulCurwell.com should not be considered legal or any other form of advice or opinion on any specific facts or circumstances. Readers should consult their own advisers experts or lawyers on any specific questions they may have. Any reliance placed upon PaulCurwell.com is strictly at the reader’s own risk. The views expressed by the authors are entirely their own and do not represent the views of, nor are they endorsed by, their respective employers. Refer here for full disclaimer.

The $25 Billion Question: How Much Are You Losing to Warranty Fraud?

Posted on by

Paul Curwell

7 minutes

3 Key Takeaways

  • Warranty fraud is revenue leakage in disguise — costing manufacturers up to $25 billion a year and eating into reserves you thought were safe.
  • It’s not just customers gaming the system — insiders, dealers, and service providers are often behind the biggest schemes.
  • You can fight back — with the right contracts, transaction controls, analytics, and service network oversight, you can plug the leaks.

Introduction

A few weeks ago, I wrote about how medtech companies are bleeding millions to revenue leakage in their supply chains. Warranty fraud is another part of that same story — a silent killer of margins that rarely makes it to the executive risk register.

Here’s the uncomfortable truth: the best available global estimates of warranty fraud losses come from studies conducted between 2009 and 2015. That’s right, we’re still relying on decade-old numbers because the industry hasn’t invested in updating them. But the losses — then pegged at around 3% to 10% of total warranty expenses, or roughly $25 billion annually — haven’t magically gone away. If anything, the growth of digital service networks and globalised supply chains has probably made the problem worse.

Executives don’t need another abstract fraud risk to worry about. You need to know how this eats into your bottom line, distorts your financial planning, and ultimately undermines your ability to commercialise new technology. So let’s get practical.

MedTech Companies Are Losing Millions to Revenue Leakage Without Knowing It

The Cost of Warranty Fraud

Warranty fraud is not a rounding error — it’s a profit killer. Surveys by AGMA Global and PwC suggest that warranty and service abuse lead to 3% to 5% revenue losses for manufacturers.

  • In the U.S. alone, dealer and service provider fraud cost about $2.6 billion in 2018.
  • Automotive and electronics manufacturers typically spend 2.5% to 2.7% of product revenue on warranty claims. A chunk of that is pure fraud.
  • Some industries report warranty fraud accounting for up to 15% of total warranty costs.

That’s money straight out of your cash flow. And because fraudulent claims push warranty expenses beyond accrued reserves, the impact doesn’t just hurt margins — it hits your balance sheet, profitability, and valuation.

If you’re courting investors or pushing for commercialisation, warranty fraud doesn’t just look like sloppy operations. It looks like you don’t have control of your supply chain or insider threat risks.

man soldering a circuit board in an electronics warranty service centre
Photo by Quang Nguyen Vinh on Pexels.com

How Fraud Affects Manufacturer Warranty Claim Forecasts

Most manufacturers do their homework when it comes to warranty reserves. Forecasts are based on historical failure rates, reliability data, and statistical modelling. On average:

  • Companies set aside around 1.4% of product sales revenue to cover warranty claims.
  • Costs range anywhere from 0.5% to 5%, depending on industry and product complexity.
  • Automotive and electronics firms typically accrue closer to 2.5% of sales.

This would all work fine — if the claims data reflected reality. Fraud blows a hole in that logic. Fictitious or inflated claims distort the numbers, meaning your forecasts are wrong, your reserves are short, and your cash flow suffers.

For executives, that means warranty fraud is not just a line-item expense. It’s a forecasting and planning risk — the kind of risk that makes boards twitchy and investors cautious. So lets take a look at how it happens.

How Does Warranty Fraud Occur?

Here’s where it gets messy. Warranty fraud is not one type of scam, it’s a whole ecosystem. And unlike other types of fraud, the biggest offenders often sit inside your own supply chain or service networks.

A. Customer Fraud

  • False claims for non-existent failures.
  • Misuse or deliberate damage disguised as product defects.
  • Counterfeit receipts or altered purchase details.

Case Study A – Automotive OEM Dealer Fraud:
Dealers manipulated mileage reporting and double-charged customers and manufacturers for the same repairs. Fraudulent warranty claims stacked up until analytics flagged the anomalies.

B. Dealer and Service Agent Fraud (Insider Threats)

  • Charging both the customer and the manufacturer for the same repair (classic double-dipping).
  • Manipulating mileage or usage data to extend warranty coverage.
  • Repeatedly claiming for the same “repair” months later.

Case Study B – Computer Technology Provider:
One company estimated losing $100 million annually to warranty fraud by service providers. After implementing data-driven fraud detection, they uncovered $11 million in fraud in nine months and saved $67 million over five years.

C. EmployeeS (Insider Threats)

  • Approving false claims for friends, family, or colluding dealers.
  • Tampering with data to inflate invoices.
  • Steering warranty work to preferred suppliers for kickbacks.

Case Study C – Electronics Manufacturer in Australia:
Fined for misleading consumers about their warranty rights — proof that warranty issues don’t just hurt margins, they also create reputational and legal risk.

D. Warranty Provider and Administrator Fraud

  • Overselling coverage or denying valid claims.
  • Colluding with dealers or service providers to share the spoils.

Case Study D – Multi-national Manufacturer’s Pan-European Warranty Fraud Detection:
A multi-national manufacturer’s after-sales assessment revealed inconsistent warranty costs across countries attributable to service agent fraud. Fraud detection analytics quickly uncovered extensive abuse despite initial management skepticism, which was then extended to other regions like Asia, revealing similar fraudulent practices involving colluding employees and service agents.

As you can see from this warranty fraud taxonomy and these case studies, these aren’t edge cases. They’re mainstream manufacturers dealing with systemic fraud inside their own networks.

The Hidden Threat to Your Bottom Line: How Sales Fraud is Bleeding Your Business Dry

4. How Should Manufacturers Protect Their Revenue From Warranty Fraud?

The good news? You don’t have to accept warranty fraud as a cost of doing business. A comprehensive control framework works when it’s implemented with intent.

a. Contracts

Clear, standardised terms that define coverage and service entitlements. Include audit rights and anti-fraud clauses to keep dealers and providers honest.

B. Transaction Controls

Validate customer entitlement and claim legitimacy every time. Automate material returns control. Layer in analytical scoring so high-risk claims get flagged early.

C. Analytics

This is where the magic happens. Combine business rules, anomaly detection, predictive models, and even social network analysis to spot patterns of collusion. Fraudsters aren’t random — their footprints are there if you look.

D. Service Network Management

Benchmark your dealers, agents, and providers. Use performance dashboards, mystery shopping, and audits to keep them accountable. Service networks are fertile ground for fraud — manage them like the strategic assets (and risks) they are.

red stop sign highlighting that it is possible to prevent and detect revenue leakage through warranty fraud and abuse.
Photo by Pixabay on Pexels.com

Conclusion: Stop the Silent Margin Killer

Warranty fraud is more than an operational headache — it’s a direct attack on your revenue, your forecasts, and ultimately your valuation. If you wouldn’t tolerate a 5% revenue leak from your supply chain, why are you tolerating it from warranty fraud?

As executives in manufacturing and medtech, you have two choices:

  1. Treat warranty fraud as an unavoidable cost and keep bleeding margins.
  2. Or treat it as a strategic risk — implement controls, demand analytics, and take back control of your revenue.

Personally, I know which choice makes your next board meeting easier.

Further Reading

  1. Curwell, P. (2025). MedTech Companies Are Losing Millions to Revenue Leakage Without Knowing It
  2. Curwell, P. (2025). The Hidden Threat to Your Bottom Line: How Sales Fraud is Bleeding Your Business Dry
  3. Kurvinen, M., Toyryla, I., Prabhakar Murthy, D.N. (2016). Warranty Fraud Management: Reducing fraud and other excess costs in Warranty and Service Operations, Wiley.
  4. The real cost of warranty fraud and how to detect it – Intellinet Systems
  5. Warranty Week archive – industry analysis
  6. LG to pay $160,000 for misleading warranty representations – ACCC
  7. Reducing service provider and warranty fraud – Elder Research case study
  8. Syncron: 5 key warranty metrics every warranty manager should know
  9. CompTIA White Paper – Warranty Abuse
  10. Warranty fraud analytics techniques – INSIA

DISCLAIMER: All information presented on PaulCurwell.com is intended for general information purposes only. The content of PaulCurwell.com should not be considered legal or any other form of advice or opinion on any specific facts or circumstances. Readers should consult their own advisers experts or lawyers on any specific questions they may have. Any reliance placed upon PaulCurwell.com is strictly at the reader’s own risk. The views expressed by the authors are entirely their own and do not represent the views of, nor are they endorsed by, their respective employers. Refer here for full disclaimer.

MedTech Companies Are Losing Millions to Revenue Leakage Without Knowing It

Posted on by

Paul Curwell

7 minutes

3 Key Takeaways

  1. MedTech companies lose 5-7% of gross revenue to fraud, supply chain leakage, and contract failures—most executives don’t even know it’s happening
  2. Your supply chain integrity is under attack from unauthorised discounting, billing fraud, and channel partners who bend the rules
  3. Revenue protection isn’t a back-office problem—it’s a strategic risk that directly impacts your bottom line and company valuation

You’re Bleeding Money and Don’t Even Know It

Here’s a sobering thought: while you’re obsessing over R&D budgets and production efficiency, your company is probably hemorrhaging 5-7% of gross revenue through fraud and supply chain leakage. That’s not a typo—it’s reality.

I discovered this harsh truth during recent work in the MedTech sector. Frankly, I was shocked. Through discussions with colleagues and clients about these estimates, I realised many executives either don’t recognise this problem or dramatically underestimate its impact.

Consider this: if your company generates $100 million annually, you’re potentially losing $5-7 million to preventable leakage.

That’s serious money—money that should be flowing straight to your bottom line instead of disappearing into the supply chain black hole.

The Billion-Dollar Problem Nobody Talks About

Revenue leakage in healthcare equipment and medical device manufacturing isn’t some theoretical concern. Industry data shows pharmaceutical companies collectively lose over $15 billion annually from rebate abuse and chargeback errors alone. Medical device companies face identical risks with even less protection.

The gross-to-net gap—the difference between what you bill and what you actually receive—reached $236 billion across healthcare in 2021. While pharma companies were forced by regulation to build revenue controls, medical device and diagnostic equipment manufacturers are still catching up, despite facing identical complexity.

Here’s why this matters to your bottom line: unlike other business costs, revenue leakage is almost entirely preventable. Every dollar you recover from leakage flows directly to profit. No additional manufacturing costs, no new R&D investment—pure margin improvement.

Where Your Money Disappears: The Top Leakage Points

Revenue vanishes at multiple stages throughout your operation. Understanding these vulnerabilities helps you plug the holes:

Manufacturing & Procurement Losses

  • Quality failures: Rejects and recalls from substandard components can trigger millions in losses
  • Supply chain fraud: Counterfeit parts compromise your supply chain integrity while creating warranty claims
  • Contract mismanagement: Poor supplier agreements allow pricing discrepancies to compound over time

Just last week, I heard a podcast about MedTech product packaging for air transport. The extreme temperature swings in aircraft cargo holds—from scorching tarmacs to sub-zero altitudes—can destroy highly calibrated diagnostic equipment. These “invisible” logistics failures create expensive writeoffs that directly impact revenue.

Channel stuffing fraud – a distribution problem

Distribution & Channel Partner Issues

  • Unauthorised discounting: Partners who exceed agreed discount limits without approval
  • Product diversion: Legitimate products sold outside authorised territories or channels
  • Contract violations: Distributors who bend pricing rules or ignore territorial restrictions
  • Billing errors: Complex pricing structures create opportunities for mistakes that favor customers
Product Diversion in the Healthcare Supply Chain: What’s the Problem and How Big Is It?

Sales & Service Revenue Gaps

The complexity of healthcare equipment pricing creates multiple leakage points:

Revenue StreamCommon Leakage Points
Equipment SalesUnauthorised discounts, pricing errors
Service ContractsUnderpriced renewals, forgotten billing
Software LicensesUnauthorised usage, poor compliance tracking
Diagnostic ConsumablesVolume discrepancies, rebate abuse
Training ServicesUnbilled hours, contract scope creep
The Hidden Threat to Your Bottom Line: How Sales Fraud is Bleeding Your Business Dry

MedTech is More Vulnerable Than Pharmaceuticals

Through my recent work, I’ve seen how medical device and diagnostic equipment companies face unique structural challenges that make revenue leakage worse:

Business Model Complexity: While pharma sells discrete products through standardised channels, MedTechs manage intricate bundles. A single “sale” might include equipment leasing, maintenance contracts, software licenses, training services, and ongoing consumables—each with different pricing structures and discount schedules.

Fragmented Distribution: MedTechs rely on more diverse partner networks than pharma companies. Specialised dealers, regional distributors, service providers, and system integrators all have custom contract terms and varying compliance capabilities.

Legacy Revenue Controls: The MedTech and diagnostic equipment sector has been slower to implement systematic revenue controls. While pharma companies invested heavily in rebate management and contract compliance systems under regulatory pressure, many healthcare equipment manufacturers still operate with outdated processes.

This complexity creates opportunities for revenue to slip through cracks that pharma companies sealed years ago.

Building Your Revenue Defense System

Protecting revenue requires systematic action across multiple areas. Here’s what works:

1. Implement Real-Time Monitoring

  • Install automated systems that flag unusual discount patterns
  • Set up alerts for pricing exceptions that exceed thresholds
  • Monitor partner sales data for territorial violations or volume discrepancies
  • Track service contract renewals to prevent revenue gaps

2. Strengthen Contract Controls

  • Automate discount approvals with clear escalation paths
  • Build dynamic pricing systems that adjust for market changes
  • Create partner scorecards that track compliance metrics
  • Implement regular contract audits beyond just financial reviews

3. Enhance Supply Chain Integrity

  • Deploy serialisation and track-and-trace technologies
  • Validate partner credentials and monitor their performance
  • Create digital twins that link physical inventory to service claims
  • Establish rapid response protocols for integrity breaches

4. Data-Driven Partnership Management

  • Cross-reference sales transactions, service logs, and rebate submissions
  • Use analytics to identify patterns that indicate fraud or process failures
  • Reward partners for validated outcomes, not just volume metrics
  • Conduct operational audits that assess pricing integrity and territorial compliance
Product Serialisation – a tool to help counter diversion and illicit trade

The Board-Level Questions You Need to Ask

Revenue protection belongs on your executive agenda. Start asking these questions:

  1. What’s our independently verified leakage rate?
  2. Can we trace our products through their entire lifecycle?
  3. Do we have complete visibility over channel partner behavior?
  4. Who specifically owns revenue protection accountability?
  5. Are we prepared for regulatory scrutiny on supply chain integrity?

If you can’t answer these questions clearly, that’s where your risk lives.

Your Next Steps: Stop the Bleeding

Revenue leakage is fixable. Companies that address it proactively enjoy stronger margins, reduced risk exposure, and better competitive positioning.

Start with these immediate actions:

Week 1: Audit your last quarter’s discount exceptions and pricing variances. Calculate the financial impact of irregular patterns.

Month 1: Implement automated alerts for pricing exceptions that exceed your predetermined thresholds. Review partner compliance with territorial and discount agreements.

Quarter 1: Deploy analytics tools that cross-reference sales data, service logs, and rebate submissions to identify anomalies.

Year 1: Build comprehensive revenue protection systems with real-time monitoring, automated controls, and regular partner audits.

The companies moving first will capture disproportionate advantages while competitors struggle with eroded margins. In an industry where innovation drives growth but operational excellence determines profitability, revenue protection has become a competitive necessity.

Your money is disappearing right now. The question is: what are you going to do about it?

Ready to plug the revenue leaks in your organisation? Start by conducting a comprehensive revenue audit to identify your biggest vulnerability areas. The sooner you act, the sooner you’ll see those lost millions flowing back to your bottom line.

Further Reading:

DISCLAIMER: All information presented on PaulCurwell.com is intended for general information purposes only. The content of PaulCurwell.com should not be considered legal or any other form of advice or opinion on any specific facts or circumstances. Readers should consult their own advisers experts or lawyers on any specific questions they may have. Any reliance placed upon PaulCurwell.com is strictly at the reader’s own risk. The views expressed by the authors are entirely their own and do not represent the views of, nor are they endorsed by, their respective employers. Refer here for full disclaimer.

Biotech and MedTech Investors Are Demanding Security and Resilience: Are You Ready?

Posted on by

Paul Curwell

8 minutes

3 Key Takeaways

  1. Your IP is your goldmine – For most biotech and medtech companies, intellectual property (IP) is the primary asset—often making up most of the enterprise value. Competitors, cybercriminals, and nation-state actors are targeting these assets, even in early stages.
  2. The “security later” myth is costing you deals – Investors are increasingly seeing weak security as a deal-breaker during due diligence. Regulatory failures can cost millions to remediate.
  3. Resilience now rivals innovation – Investors increasingly allocate capital to companies that can demonstrate not just breakthrough science, but also the security, integrity, and resilience to protect it.

Security Is a Business Decision—Not a Technical One

Security decisions often get framed as technical, complex, or something to worry about later. That mindset is dangerous—especially in life sciences, where what you don’t protect can cost you your next round, your IP rights, or your company’s future.

In reality, early-stage biotechs and medtechs face three unavoidable truths:

  1. Your intellectual property is the business — and likely the only real asset you own.
  2. You’re already a target — from competitors, cybercriminals, and even foreign intelligence services.
  3. Investors are watching — and asking questions you must be ready to answer.

The risk environment has shifted. Today’s adversaries aren’t just hackers in basements. They include:

  • Ransomware gangs targeting IP-rich companies for extortion
  • Foreign actors stealing trade secrets to boost their own biotech industries through espionage and foreign interference
  • Contract partners and employees who, as insider risks, might mishandle, steal, or deliberately leak sensitive information

You may not stop every threat—but you can become a harder target. And that makes you a safer bet for investors.

Security Creates Value—and Investors Know It

Here’s what most founders miss: Security doesn’t just protect value. It creates it.

Early-stage companies that build in basic controls gain:

  • Faster fundraising – Clear controls speed due diligence.
  • Smoother partnerships – Big pharma won’t risk IP leaks from weak links.
  • Fewer regulatory delays – Secure-by-design systems reduce audit findings.

It’s not about locking everything down—it’s about stage-appropriate controls that prove you can grow responsibly.

Surveys show over 70% of life science investors now flag data integrity and IP protection as top decision factors. That’s because the risk is real: trade secret theft costs the global economy more than $1 trillion annually, and life sciences firms are prime targets.

Nation-state actors, insider risks, and ransomware gangs are no longer fringe concerns—they’re active threats. This isn’t hypothetical. It’s a competitive filter—and investors are paying attention.

The 3 SMB Risk Management frameworks you need to protect your business

When IP Protection Becomes a Business Valuation Driver

From my experience helping companies navigate security challenges, there are four critical stages where security transforms from “nice to have” to “deal or no deal.”

A. Discovery Stage:

Many founders assume they’re “too early” for security. In reality, premature public disclosure or leaks can destroy patent eligibility and future value.

Case Study: A European gene therapy startup lost patent protection after a postdoc shared results at a conference before filing. The resulting “prior art” invalidated their core IP, forcing an 18-month delay and a complete pivot.

Whilst many medtechs and biotechs fail at this conceptual hurdle, they still have valuable information and data assets with some residual value. A resonable investor might ask “How do you prevent premature disclosure of trade secrets? What’s your invention disclosure process?”

5 Tips to manage information security risks during discovery:

  • Enable conditional access controls and sensitivity labels for IP documents using existing tools.
  • Implement NDAs for everyone, including advisors and part-time collaborators.
  • Create invention disclosure workflows to track who invented what, when.
  • Run brief security inductions focused on IP protection basics.
  • Most early-stage companies already pay for Microsoft 365 tools like Purview through their E5 subscription (or AWS, Google equivalents). These tools are designed to manage these risks, but they’re never turned on!
Microsoft Purview Information Protection – an overview

B. Prototyping Phase:

Outsourcing and collaboration introduce new risks. Without strong IP protection clauses and access controls, your designs and data can walk out the door. Here are two examples:

Case Study 1: A Boston medtech company discovered a manufacturer had shared CAD files with competitors. Weak contracts and lack of controls cost them millions in lost advantage.

Case Study 2: A European medtech startup outsourced prototyping to an overseas partner. Within months, a similar device appeared in local patent filings. Weak contracts and open file sharing enabled the leak. Surveys indicate that over half of life science firms have experienced IP leakage during collaboration or outsourcing.

If your business is at this stage in the lifecycle, I think its perfectly reasonable that a potential investor might ask: “What IP protection clauses are in your supply chain contracts? How do you audit third-party access to sensitive data?”.

Tips to manage risks in outsourcing and prototyping

Here’s five simple actions you can do to manage your prototyping risk:

  • Upgrade vendor contracts with IP protection, confidentiality, and audit clauses.
  • Implement data loss prevention policies to prevent sensitive IP sharing via email or chat.
  • Use secure collaboration portals with controlled access.
  • Conduct regular access reviews for sensitive information.
  • Use a secure, timestamped invention disclosure log—this can be as simple as storing cryptographic hashes of documents with trusted timestamps to prove originality and timing.
Protecting Your R&D When Outsourcing Rapid Prototyping

C. Clinical Validation:

Data integrity and regulatory compliance become paramount. According to FDA enforcement summaries, a significant portion of warning letters cite documentation and data integrity deficiencies.

Case Study: One oncology trial faced a clinical hold after inspectors found inadequate data controls, costing $1.8 million in remediation and a 14-month delay.

As life science companies progress to clinical validation, regulatory scrutiny really steps up. Investors start asking tough questions like “Do you have FDA compliant data management systems? Can you demonstrate audit trail capabilities for trial data?”.

If you can’t satisfy a regulator, your commercialisation timeline might be set back by one to two years, and your additional cash burn could send you under.

Don’t wait until the last minute to factor in security – there’s a reason why the FDA and TGA adopted ‘secure by design’ principles.

Tips to manage security and integrity risks at the Clinical Stage:

  • Encrypt all clinical trial data using built-in cloud platform features.
  • Develop data integrity SOPs aligned with regulatory expectations.
  • Assess CRO security practices before signing contracts.
  • Prepare incident response plans for data breaches or integrity issues.

D. Scaling Phase:

At this stage, due diligence intensifies. Investors want proof you can scale—securely, not just scientifically.”

That means showing your approach to information security, data integrity, and resilience to recover from disruption or compromise is well thought out and consistently applied.

Case Study: A US-based biotech lost millions in valuation after a researcher emailed unpublished gene-editing data to a competitor before patent filings. The company lacked basic NDAs and data loss prevention controls. Industry studies suggest that premature disclosure or insider risks resulting in inadvertant publication are a leading cause of patent novelty disputes.

Potential investor questions:

  • “How do you manage privileged access to trade secrets and sensitive clinical data?”
  • “What happens if someone in your supply chain is compromised?”
  • “Can you detect and respond to insider threats before they damage your valuation?”

Scaling Stage Actions:

  • Formalize your security program with written policies and governance.
  • Implement privileged access management for sensitive IP and trial data.
  • Establish vendor risk assessment processes.
  • Provide regular employee security awareness training.
Actions Life Science SMBs Can Take to Reduce The High Cost of Licensing Fraud

What Investors Now Ask (And What You Need to Answer)

Today’s investors aren’t just evaluating your science—they’re evaluating your ability to protect it. Here’s what they want to know:

  • Are your information security controls appropriate for your risks?
  • Can you demonstrate good data integrity?
  • How do you protect global operations? What controls are in place for international CROs and suppliers?
  • Are you compliant with export controls?
  • How do you manage insider risk?
  • How do you protect your data and IP with contract manufacturers and research partners?
49% of Private Equity deals fail because of undisclosed data breaches

The Bottom Line: Security as a Strategic Advantage

In 2025, security isn’t just about prevention—it’s about acceleration. When you can show your IP is protected, your data integrity is sound, and your partners are secure, you’re demonstrating the kind of operational maturity that makes you investable.

Companies that invest in security early don’t just avoid disasters—they grow faster:

  • Faster fundraising: Mature security speeds up due diligence.
  • Higher valuations: Strong IP protection earns investor premiums.
  • Partnership acceleration: Pharma and CROs want secure collaborators.
  • Regulatory efficiency: Better data integrity, fewer delays.
  • Competitive edge: While others scramble to patch gaps, you’re moving forward.

In a world where cybercriminals, competitors, and foreign governments all want your IP, the question isn’t whether you can afford to invest in security—it’s whether you can afford not to.

References:

  • Deloitte, “2024 Global Life Sciences Outlook”
  • PwC, “Biotech and Pharma Investor Survey 2023”
  • FDA Warning Letters Database
  • World Intellectual Property Organization (WIPO) Reports
  • Office of the Director of National Intelligence, “Annual Threat Assessment 2024”
  • Ponemon Institute, “Cost of a Data Breach Report 2024”
  • Various industry case studies and market analyses

DISCLAIMER: All information presented on PaulCurwell.com is intended for general information purposes only. The content of PaulCurwell.com should not be considered legal or any other form of advice or opinion on any specific facts or circumstances. Readers should consult their own advisers experts or lawyers on any specific questions they may have. Any reliance placed upon PaulCurwell.com is strictly at the reader’s own risk. The views expressed by the authors are entirely their own and do not represent the views of, nor are they endorsed by, their respective employers. Refer here for full disclaimer.

Actions Life Science SMBs Can Take to Reduce The High Cost of Licensing Fraud

Posted on by

Paul Curwell

7 minutes

3 Key Takeaways

  1. Missed royalties are more than rounding errors—for SMBs, they can cripple R&D and scare off investors.
  2. Manual reporting is a fraud magnet—system-generated data (like from LIMS) is your best defence.
  3. Licensing compliance isn’t legal fluff—it’s core to your commercialisation, valuation, and survival strategy.

If You’re Not Watching Your Licensees, Someone’s Losing—Probably You

Let’s cut to the chase: if you license your IP and aren’t enforcing data integrity for royalty calculations, you might as well be leaving cash in a petri dish and walking away.

In life sciences, diagnostics, and biotech, licensing isn’t just a business model—it is the business. Especially for small and mid-sized companies with 20 staff, a world-changing idea, and a bank account hanging on one cheque at a time.

As someone who’s spent years advising on IP protection, fraud, and insider threat strategies across research, life sciences, and tech, I’ve seen what happens when compliance becomes a handshake instead of a system.

Spoiler: it’s not pretty. Especially when your royalty stream turns into a trickle, and your investors start asking awkward questions.

Manual Reporting? Welcome to Fraud City

Here’s the dirty little secret of licensing in life sciences: most of the reporting isn’t automated.

Unlike software, where telemetry and keys enforce usage limits, biotech licensing often relies on spreadsheets, self-reports, and vague declarations of test counts or unit sales. It’s the business equivalent of trusting your teenager to “fill out the fuel log.”

When there’s money on the line, some licensees will game the system. Not all—but enough that you need to plan for it. Underreporting, omitted tests, unauthorized sublicensing, accident or intentional… it happens.

Now, to be clear: while there’s strong evidence that the pharmaceutical industry loses billions each year to IP theft, the scale of licensing fraud alone is harder to pin down. Licensing fraud is widely recognised in legal and business literature as a major risk – I’ve seen it myself – but precise loss values are rarely made public due to confidentiality and settlement agreements.

So while we can confidently say the combined losses from IP theft and licensing fraud are likely in the billions, the actual breakdown remains opaque. In short: there’s a lot of smoke, even if no one’s tallied the exact fire.

empty blood samples in a laboratory ready for diagnostic testing
Photo by Pavel Danilyuk on Pexels.com

Case Study: Royalty Pharma v. Boehringer Ingelheim

Still think this is just a theoretical risk? Let’s take a look at Royalty Pharma Collection Trust v. Boehringer Ingelheim GmbH—a real-world licensing dispute with millions on the line.

In this 2021 case before the English High Court, Royalty Pharma claimed that Boehringer had underpaid royalties by around €23 million under a license agreement for diabetes treatments containing linagliptin. The dispute turned on whether Boehringer owed royalties on all global sales of products manufactured in Germany—even when those products were sold in countries where the patent wasn’t in force.

The court sided with Royalty Pharma. It held that, under the amended contract terms, Boehringer was indeed required to pay royalties on all linagliptin products made in Germany—regardless of where they ended up. Why? Because that’s what the contract (arguably) said.

The case is a masterclass in why precision matters. It also shows how royalty disputes aren’t just abstract risks—they’re costly, complex, and reputationally messy. Unfortunately, they can also wreck relationships with your clients in what is often a limited market of buyers and sellers, so these matters need to be dealt with properly. And if a €23 million shortfall can happen between industry heavyweights, imagine the exposure for an SMB with less legal firepower and tighter margins.

Royalty-Pharma-Collection-Trust-v-Boehringer-Ingelheim-GmbH-1Download

Why This Matters to Your Bottom Line

Licensing fraud and underreporting don’t just shave a few points off your revenue—they hit everything that matters:

  • R&D suffers: If you’re not collecting full royalties, you’re funding your innovation with Monopoly money. Sooner or later, it will dry up.
  • Valuation drops: Investors value predictable revenue. Fraud kills predictability. Disputes deter investors and raise questions about your business model and management team.
  • Operations stall: Underreporting can hide scaling problems or field-of-use breaches that sabotage your roadmap.

And in a sector staring down a $200+ billion patent cliff by 2030 (Gowling WLG, 2025), you can’t afford to guess where your money’s going.

The Simple Fix: Trust, But Verify

Here’s the good news: you don’t need to become a forensics lab to fix this. But you do need a few essentials baked into your licensing strategy:

  1. Mandate system-generated reports. Ask for data from a LIMS or equivalent operational system. Don’t accept “manual summaries”—it’s like accepting a selfie as proof of tax compliance.
  2. Build audit rights into licensing contracts. Spell out your right to inspect source data, not just reports. And include clauses that shift audit costs to the licensee if they’ve been underpaying.
  3. Cross-check with public data. Use regulatory submissions, sales disclosures, or even market intelligence platforms to sanity check what you’re being told.
  4. Include escalating remedies. Think late fees, interest, even the right to revoke exclusivity if terms are breached. It’s not petty—it’s protection.
  5. Consider whether you want to be the bad guy. Sometimes it makes since to hire someone else to do licensing compliance on your behalf. That means they can ask the touqh questions, and allow you to sweep in to smooth over any misunderstanding with plausible deniability.
  6. Use plain language contracts. If you need a lawyer to understand your royalty clause, you’re doing it wrong. Make the terms so clear even a VC can’t misunderstand them.

Still thinking licensing compliance is just something legal looks after?

Let me put it differently: enforcing licensing terms directly impacts strategy, cash flow, market positioning, and investor readiness.

A well-managed license with strong auditability and clean data boosts confidence, accelerates commercialisation, and supports IPO or acquisition discussions. A sloppy license? That’s a due diligence landmine.

In fact, one of my early jobs was licensing compliance for a biotech that sold services. I remember pouring over compliance filings for hours, validating whether they were likely reasonable and then preparing the invoice. Years later, we developed this Compliance Continuum for a review of Australia’s Medicare system to describe this (Philip, 2023):

Philip (2023). The Compliance – Fraud Continuum as it applies to IP Licensing in Life Sciences and Health Care

Call to Action: What You Need to Do Now

If you’re a licensor—especially an SMB in research, diagnostics, or biotech—here’s what I want you to do this week:

  1. Review your license agreements. Are you requiring system-generated reports? If not, it’s time to fix that.
  2. Talk to your licensees. Don’t assume malice—but don’t assume accuracy, either. Ask what systems they use to track usage and reporting.
  3. Get your legal team (or external counsel) on board. If contracts are vague or weak, start drafting updates that include audit rights, remedy clauses, and clear data obligations.
  4. Think like an investor. Would you back a company that couldn’t verify half its revenue? No? Then don’t run yours that way.

Because in life sciences, your trade secrets and licensing revenue are your business. And when you’ve only got one shot at commercialisation—you better be sure someone’s not quietly stealing it.

Building a media monitoring capability 101

References

DISCLAIMER: All information presented on paulcurwell.com is intended for general information purposes only. The content of paulcurwell.com should not be considered legal or any other form of advice or opinion on any specific facts or circumstances. Readers should consult their own advisers experts or lawyers on any specific questions they may have. Any reliance placed upon paulcurwell.com is strictly at the reader’s own risk. The views expressed by the authors are entirely their own and do not represent the views of, nor are they endorsed by, their respective employers. Refer here for full disclaimer.

Integrating Security into Quality Management Systems

Posted on by

Paul Curwell

6 minutes

My 3 Key Takeaways

  • If you’re in deeptech or manufacturing, your Quality Management System (QMS) can do way more than keep auditors happy—it can protect your IP, prevent fraud, catch compliance failures, and reduce insider threat risk.
  • Integrating your security and compliance processes into a QMS lets you achieve more with less: fewer tools, fewer people, fewer mistakes.
  • Most deeptech SMBs already have the infrastructure—they just haven’t connected it all yet. That’s the opportunity.

Let’s Talk About the Boring Stuff That Could Kill Your Business – Quality & Security

Let’s be honest—QMS, fraud controls, insider threat detection… not exactly stuff that gets founders leaping out of bed. But you know what’s worse than a dry compliance meeting?

  • Watching your research walk out the door with a departing employee.
  • Getting sued because someone emailed a product claim to a customer before the regulator signed off.
  • Losing a major sales deal because your QMS and security systems don’t talk to each other.

If you’re in a knowledge-intensive industry and chasing investor capital or enterprise contracts, these aren’t just compliance risks. They’re existential threats. Thankfully, you probably already have everything you need to prevent them!

Read on to find out how.

Your QMS Doesn’t Have to Just Cover Compliance—It’s Commercial Defence

Sure, you’ve got ISO 9001, ISO 13485, or FDA 21 CFR 820 in place. You have to. But compliance is the floor, not the ceiling. Today, quality is about more than audits. It’s about trust—with regulators, buyers, and investors. And increasingly, quality failures stem from security failures.

This means your risk and compliance programs can’t live in silos – let me show you what I mean:

Security FailureBusiness & Compliance Impact
Employee sends IP to Gmail pre-exitTrade secrets lost, investor trust damaged
Supplier compromise injects codeProduct recall, brand hit
Staff emails HCPs with unapproved claimsRegulatory violation, potential litigation
Ransomware halts diagnosticsDelayed care, reputational damage
Research data shared publiclyIP protection compromised

As you can see from this table, these aren’t just cybersecurity issues. They’re business continuity, liability, and commercialisation risks as well, which are exactly what a well-integrated QMS should be catching.

The 3 SMB Risk Management frameworks you need to protect your business

Integrate Quality and Security to Create Your Advantage

Most deeptechs are SMBs which run lean. No in-house CISO. No army of compliance officers. But—you do have a quality team and a QMS. That’s your edge. If you can embed security, IP protection, and insider threat controls into your QMS, you gain:

  • Operational efficiency—fewer tools and frameworks, less duplication
  • Investor readiness—clean audit trails, documented controls and processes that work
  • Market trust—quality and compliance proof baked in to win and retain customers

The good news is your business can run lean and stay secure.

You don’t need a CISO to lead on risk—just smart, integrated processes.
Photo by Andrea Piacquadio on Pexels.com

So enough talk, what’s the fix? Here’s how you do it

Step 1: Identify Overlapping Risks

Bring together your Quality, IT, Compliance, and Security folks—yes, even if that’s just two people with five jobs—and map out shared risk areas:

  • Trade secret risks: Who has access to research, models, or source code—and what happens when they resign?
  • Outbound comms risks: Can someone email a healthcare provider or investor with an unapproved claim?
  • Supplier risks: Are third-party vendors accessing your R&D environment or pushing code into your stack?
  • Data risks: Are IP files, calibration logs, or clinical datasets being handled securely?

Spoiler alert: the same systems and workflows touch all of these. The only thing that changes is who’s watching and why. We can leverage this!

Step 2: Build Integrated, Actionable Processes

Expand your existing QMS workflows—incident logs, CAPA, document control—to cover your information security and fraud risks, such as:

  • Departing employee sends IP to Gmail? Log it as a deviation. Raise a CAPA. Trigger access review. Investigate. Retrain.
  • Email flagged with unauthorised claim to an HCP? Route through the same CAPA process as any product defect.
  • Security incident in supplier data flow? Link it to your QMS audit trail and generate a risk-rated action plan.

If your business runs on the cloud, you probably already have systems to manage these, even if you’re paying for them but they’re not configured. Let’s make them work harder.

Unlocking New Uses for your SIEM: Beyond Cybersecurity

Step 3: Align Your Systems to Real Business Needs

Think like an SMB: use what you already have. Forget vendor feature lists. Start with those core requirements your business actually needs:

  • Secure document management
  • Workflow orchestration (escalations, approvals, logging)
  • Audit trails that regulators and enterprise buyers can follow
  • Real-time alerting for policy violations or unusual activity
  • Case management for incidents and corrective actions
  • Dashboards and management analytics across all domains

Here are some use cases to demonstrate how all this might work in practice:

  • Microsoft Purview + Sentinel: Classify sensitive research data, enforce retention policies, and monitor emails to detect regulatory violations and IP risks.
  • GCP Chronicle + Workflows: Detect insider threats, trigger automated reviews, sync results with your QMS and HR systems.
  • AWS GuardDuty + Step Functions: Scan S3 buckets for unclassified IP, auto-trigger CAPAs in your QMS.
  • Digital QMS platforms: These must integrate with your SIEM, cloud, ERP, HR, and research platforms. No integration = no scale.

The result? One process. One system. Many benefits.

Step 4: Monitor, Automate, and Expand

Use your existing monitoring stack—not just for cyber, but for compliance, fraud, and regulatory use cases:

  • Microsoft Purview: Classify IP, research data, or regulated content and flag outbound emails that contain unapproved medical claims.
  • Splunk or Elastic: Detect download spikes, file movements, or unusual access patterns.
  • SIEM + QMS: Auto-trigger a CAPA or risk log entry when a critical security alert is detected.

Now you’re using the same stack to:

  • Prevent insider threats
  • Catch regulatory breaches, possibly before they happen
  • Monitor fraud risk
  • Strengthen IP protection
  • Prepare for inspections, audits and regulatory approvals

This is where the ROI multiplies.

The Final Word – Strength and Opportunity

SMBs always run lean. But lean doesn’t mean exposed.
You already have:

  • A QMS
  • Cloud, email, and monitoring tools
  • Data and IP worth protecting

All you need is to connect the dots.
Not with more tools. Not with more people.
With smarter, integrated processes that do more with less.

This isn’t about adding compliance for compliance’s sake. It’s about:

  • Avoiding lawsuits and insider breaches
  • Scaling your business without scaling your risk
  • Impressing investors and enterprise buyers with how secure—and smart—you operate

That’s how you build a credible, defensible, and investment-ready business—without losing your edge.

Further Reading

DISCLAIMER: All information presented on PaulCurwell.com is intended for general information purposes only. The content of PaulCurwell.com should not be considered legal or any other form of advice or opinion on any specific facts or circumstances. Readers should consult their own advisers experts or lawyers on any specific questions they may have. Any reliance placed upon PaulCurwell.com is strictly at the reader’s own risk. The views expressed by the authors are entirely their own and do not represent the views of, nor are they endorsed by, their respective employers. Refer here for full disclaimer.

The 3 SMB Risk Management frameworks you need to protect your business

Posted on by

Paul Curwell

7 minutes

Key Takeaways:

  1. Small-medium businesses (SMBs) in innovative sectors face unique risk management challenges—IP theft, insider threats, and foreign interference aren’t just “big company problems.”
  2. Implementing three SMB risk management frameworks—SMB1001 (Gold/Platinum), AS 8001:2021, and ASIO’s Secure Innovation guidance—gives you a best-practice program without reinventing the wheel.
  3. For SMBs, this approach isn’t just smart risk management—it boosts investment appeal, protects your supply chain, and helps you scale with confidence.

If you’re a founder or executive at a knowledge-intensive SMB—think biotech, medtech, software, deeptech or advanced manufacturing—then I’ve got news for you: your biggest threat might not be a cyber breach. It might be someone inside your business walking out with your IP and handing it to a foreign competitor.

Yeah. Grim.

The worst part? Most SMBs don’t even realise they’re a target—until it’s too late.

In my last post, I argued for collapsing insider threat, fraud, and integrity risk programs into one integrated workforce risk model. Today, I’ll show you how to go even further—by adding cybersecurity and innovation security to the mix using three standards already built for SMBs.

Spoiler alert: you don’t need a bespoke program or a 100-page strategy deck. Just plug and play with SMB1001, AS 8001, and ASIO’s Secure Innovation guidance.

Why You Need a Whole-of-Business Risk Lens

Innovative SMBs are juicy targets.

You’ve got valuable research data, intellectual property, and commercialisation plans. You’re agile, fast-growing, and often working with overseas partners. That’s a goldmine for corporate spies, fraudsters, and even state-backed actors.

Don’t believe me? Ask the Australian startups quietly briefed by ASIO on foreign interference. Or look at the biotech company that lost its trade secrets in what started as a “friendly” joint venture.

Here’s the “triple threat” that innovation-driven SMBs face:

  • Cyber Security breaches that expose your R&D and IP.
  • Insider Threats from employees, researchers, or suppliers with too much access.
  • Fraud and Integrity failures that destroy trust, attract regulators, and scare off investors.

Three Standards. One Smart Strategy.

You can cover all these risks by combining three existing frameworks. Here’s how they work together:

1. SMB1001 (Gold or Platinum) – Your Cyber Backbone

Designed specifically for SMBs, SMB1001 provides cyber maturity models from Bronze to Diamond. For high-growth and innovation-focused businesses, Gold and Platinum are the sweet spot.

Gold gives you:

  • Cybersecurity policies for staff and contractors
  • Acceptable use rules (no, your intern shouldn’t be crypto mining on the R&D server)
  • Background checks, access reviews, incident response plans, cyber awareness training

Platinum adds:

  • External audits
  • Continuous monitoring and automated alerts
  • Integration with HR and procurement
  • Real-world testing like penetration and social engineering simulations

These controls are critical—but they don’t explicitly cover fraud, integrity, or culture.

An image of SMB1001:2025 cover.
SMB1001 produced by Dynamic Standards International

Which brings us to…

2. AS 8001:2021 – The Fraud, Corruption & Insider Threat Muscle

This standard fills the governance and integrity gap.

It requires:

  • A fraud and corruption control policy, code of conduct, and clear accountability
  • Whistleblower protections and reporting channels
  • Regular controls testing and board-level reporting
  • A leadership culture that promotes ethical behaviour

But protecting IP, innovation, and research requires one more layer…

3. ASIO’s Secure Innovation Guidance – Your National Security Overlay

This free advisory framework from ASIO (yes, the spy agency) focuses on protecting Australian innovation.

It recommends:

  • Security risk assessments tailored to IP, R&D, and commercialisation
  • Vetting foreign collaborators, investors, and suppliers
  • Government engagement for threat intelligence and support
  • Building a “secure innovation” culture, driven by leadership

Most businesses never think to ask: Could this partnership be a risk? But in today’s landscape, that’s not paranoia—it’s smart due diligence.

What This Means for You

To fully protect your people, assets, and innovation pipeline, you need all three:

  • SMB1001 covers your cyber baseline
  • AS 8001 strengthens your workforce and governance controls
  • ASIO’s Secure Innovation addresses foreign interference, IP protection, and national security threats

Table: Comparison of Coverage by SMB Risk Management Framework

Risk Area / ObligationSMB1001 (Gold/Platinum)AS 8001:2021ASIO Secure Innovation
Cybersecurity policies & access controls✅ Fully covered❌ Not covered✅ Covered
Fraud, corruption, and integrity policies⚠️ Partial (cyber only)✅ Fully covered✅ Covered in context
Supplier / third-party risk✅ Covered✅ Covered✅ Covered
Insider threat / workforce risk monitoring⚠️ Basic logging only✅ Covered✅ Covered + vetting
Whistleblower / confidential reporting❌ Not required✅ Required✅ Strongly encouraged
Board / leadership risk reporting❌ Not specified✅ Required✅ Expected
Controls assurance / testing⚠️ Basic requirements✅ Required✅ Strongly encouraged
Innovation / IP risk assessment❌ Not covered❌ Not covered✅ Core focus
Foreign collaboration / Counter Foreign Interference❌ Not included❌ Not included✅ Core focus
Security culture / tone from the top⚠️ Cyber awareness only✅ Required✅ Essential
Engagement with government for threat intel❌ Not included❌ Not included✅ Strongly recommended
Mapping of the three standards against my core integrated workforce program requirements

✅ = Fully covered ⚠️ = Partially covered ❌ = Not covered

Think of it this way:

  • SMB1001 is your body armour
  • AS 8001 is your immune system
  • ASIO Secure Innovation is your early warning radar

How to Build It Without Melting Down

You don’t need a 10-person security team. Start small. Be practical.

Here’s 9 Steps to Get You Started:

  1. Map your current controls to each framework. Gaps will show themselves quickly.
  2. Update your policies: Include anti-fraud, IP protection, acceptable use, and supplier conduct.
  3. Close quick wins: Add a code of conduct, whistleblower channel, and leadership reporting.
  4. Create a cross-functional risk committee: HR, IT, Finance, Legal, Commercial—all in one room.
  5. Run an integrated risk assessment: Cover cyber, insider threat, fraud, integrity, innovation/IP, and foreign partnerships.
  6. Train your people: Cyber training is great—but also teach secure innovation and fraud red flags.
  7. Engage with government early: ASIO Outreach and ACSC are there to help, not to audit.
  8. Review and test regularly: Dashboards and audit trails go a long way with investors and boards.
  9. Vetting is non-negotiable: Screen staff, partners, and suppliers—especially around your R&D and IP.

But Where’s the Value? What You Get in Return

  • Investor confidence: Series B investors and enterprise customers want to know your IP is protected.
  • Culture clarity: One integrated program = clear expectations, fewer grey zones.
  • Operational edge: You de-risk your go-to-market, protect innovation, and improve scalability.

Oh—and you avoid being front-page news.

Crafting Security Business Cases for Executive Buy-in

Final Word

You’re building the future. Don’t let it get stolen, leaked, or sabotaged by someone you missed on a risk register.

You don’t need to reinvent the wheel. You need structure, culture, and clarity.

When you combine SMB1001, AS 8001, and ASIO’s Secure Innovation guidance, you’re building more than a compliance program. You’re building resilience. You’re protecting growth.

And you’re doing it with a framework that scales as you do.

So don’t wait for the “oh crap” moment. Start building your secure workforce risk program now.

Your investors, your board, and your future self will thank you.

Further Reading:

DISCLAIMER: All information presented on PaulCurwell.com is intended for general information purposes only. The content of PaulCurwell.com should not be considered legal or any other form of advice or opinion on any specific facts or circumstances. Readers should consult their own advisers experts or lawyers on any specific questions they may have. Any reliance placed upon PaulCurwell.com is strictly at the reader’s own risk. The views expressed by the authors are entirely their own and do not represent the views of, nor are they endorsed by, their respective employers. Refer here for full disclaimer.

We often overlook criminology when combating insider threats, fraud and sabotage

Posted on by

Paul Curwell

6 minutes

Key Takeaways:

  1. You can’t fix insider fraud or sabotage with firewalls alone—these are people problems, not just process problems, so you need to consider perpetrator motive in your control design.
  2. Behavioural science and criminological theory offer practical ways to design smarter, cheaper, and more effective controls.
  3. Mapping threat types to motivations is the secret sauce to stopping expensive mistakes—before they hit your bottom line.

Why this matters to your business

If you think trade secrets theft, sabotage, or internal fraud is something that happens to “other companies,” let me burst that bubble. These threats are not random—they’re often deeply personal. And they’re expensive. The Association of Certified Fraud Examiners (ACFE) estimates that internal fraud alone costs businesses 5% of annual revenue. For a $100M business, that’s a $5M hole—every year.

And that’s just the financial side. The reputational cost? The loss of trust with investors or research partners? The delay to your product launch because someone leaked your IP to a competitor? That stuff doesn’t show up on a balance sheet… until it does.

So how do we stop it?

Let’s talk motive (yes, like in crime dramas)

We often forget security and fraud actors have different motivations. Some actors are in it for profit. Others want revenge, power, or validation. If you treat all threats the same—say, by rolling out the same boring training module to every department—you’re wasting money and creating a false sense of security.

This first table helps you step back and align your controls to the actual psychology of your adversary.

Table 1: Motivation-Based Threat Profiling

Threat TypeKey MotivationsRelevant TheoryConsiderations for Control Design
Organised CrimeProfit, group objectivesRoutine Activity TheoryTarget hardening, threat intel, supply chain vetting
Insider ThreatsRevenge, stress, entitlementControl TheoryStrengthen social bonds, build fair culture, early intervention
Nation-State ActorsMoney, Ideology, Coercion, Ego (MICE)MICE TheoryAccess controls, vetting, protective security
man sitting on snowy park bench in winter
Photo by Amirhossein Bolourian on Pexels.com

How to use this:
When assessing security risks, we often fail to ask “What is the likely motive”. If your AI is being stolen by an employee, that’s an insider threat, not a problem with cyber criminals. The control response (culture, access rights, change monitoring) needs to reflect that nuance.

Behavioural theory helps at every risk stage

Here’s the bit I wish someone had told me 10 years ago: criminological theories don’t just help you after something goes wrong—they help you design better systems from the start. I use these theories for risk indentification, design risk treatments, and frame executive dialogue.

Table 2: How Behavioural Theory Supercharges Risk Management

Risk StageHow Theories Help
Risk IdentificationReveal root causes and hidden risk signals
Control DesignTailor controls to motivations (not just compliance)
Risk AssessmentImprove likelihood and impact estimates
Monitoring & ReviewSpot early warning signs and behavioural red flags
Training & AwarenessShift from checkbox compliance to ethical behaviour reinforcement
Applying the critical-path approach to insider risk management

How to use this:
When you’re building your next fraud control or insider risk program, don’t start with a control library—start with questions. What kinds of pressures might lead someone to rationalise stealing research data? Where are the opportunities? Who might feel disengaged or unfairly treated? These insights help you focus resources where they’ll have the most impact—without overengineering.

Choosing the right theory for the job

Criminological theory might sound academic, but it’s just a lens—a way to make better sense of why risks materialise. I often get asked, “Which theory should I use?”. The answer is: it depends, which is helpful-unhelpful. Here’s a guide I use in consulting to help organisations focus their resources.

Table 3: Best-Fit Theories for Common Security Risks

Risk AreaRelevant TheoriesWhy It Matters
EspionageMICE (Money, Ideology, Compromise or Coercion, Ego), Routine Activity, Swiss CheeseExplains varied motives, layered failures, and access points
Trade Secrets / IP TheftRoutine Activity, Crime Opportunity, MICEFocuses on access, motivation, and weak controls
Internal Fraud / CorruptionFraud Triangle, Routine Activity, Control TheoryAddresses personal pressure, weak oversight, and cultural cues
SabotageOpportunity Theory, Strain TheoryTied to frustration, injustice, and lack of guardianship
Workplace ViolenceStrain, Social Learning, Routine ActivityDriven by grievance, modeled behaviour, and opportunity
Supply Chain DiversionCrime Pattern Theory, Opportunity TheoryHelps pinpoint vulnerable choke points and recurring loss patterns
HUMINT cycle and the recruitment of insiders

How to use this:
Say your business is about to enter a new research partnership with a university or foreign lab. You’re worried about losing your IP or trade secrets. Start by applying MICE Theory to understand potential risks on the other side: Are their staff well-paid? Are there ideological risks? How vulnerable is your business partner or their employees to coercion or bribery? Then combine that with Crime Opportunity Theory to assess access and controls.

You don’t need to become a criminologist—but bringing these concepts into boardroom discussions will make your risk strategies more intelligent and effective.

What you should do next

  1. Reassess your threat profiles – If your risk registers don’t account for behavioural motivations, rewrite them.
  2. Train your teams on motive-driven threats – Stop relying on bland compliance modules. Teach managers how to spot early red flags.
  3. Map controls to theories, not hunches – Don’t throw money at controls that don’t match the motive. Use behavioural theory to guide investment.
  4. Get smarter about culture – Your culture is your first control. Build fairness, transparency, and connection before a bad day turns into a $10M incident.

One final (uncomfortable) truth

You can’t patch human vulnerability like you patch software. Your best firewall is a culture that understands why people do the wrong thing—and a strategy that uses that insight to get ahead of the next crisis.

So, if you’re ready to move beyond checkbox security and build a behavioural-led risk strategy, let’s talk. I’ve got frameworks, models, and a whole lot of lessons learned the hard way.

Further Reading:

DISCLAIMER: All information presented on PaulCurwell.com is intended for general information purposes only. The content of PaulCurwell.com should not be considered legal or any other form of advice or opinion on any specific facts or circumstances. Readers should consult their own advisers experts or lawyers on any specific questions they may have. Any reliance placed upon PaulCurwell.com is strictly at the reader’s own risk. The views expressed by the authors are entirely their own and do not represent the views of, nor are they endorsed by, their respective employers. Refer here for full disclaimer.