Corporate identity theft cost British businesses £50 million in 2005 and this figure is set to increase 1,300% by 2020, according to research.
ID theft is one of the fastest growing risks firms face and large businesses are most likely to be affected, a study from commercial insurer Royal & SunAlliance (R&SA) found.
It happens when fraudsters steal the identity of a legitimate company and then trade under its credit and name. It can affect companies through assets being stolen and bank accounts being emptied by fraudsters trading on a company's creditworthiness.
Businesses with over 250 employees will pick up the biggest share of costs from corporate identity theft and London firms are forecast to be hit by the greatest increase in costs at £140 million by 2020, the study found. The sectors most likely to be affected are communications, banking, finance and insurance.
Corporate identity and reputation can be damaged quickly in an age of 24-hour media coverage and internet information, R&SA said.
The increase in businesses affected by this crime is mirroring the increase in personal ID theft, with one in 10 people seeing their personal details used by thieves to obtain credit.
Jon Woodman, director of Risk Solutions at R&SA, said: "Companies are increasingly being affected by corporate ID Theft and many are worried about the risks of fraudsters stealing their company identity, as this could lead to a loss of competitive advantage or public confidence.
"With identify theft a growing risk facing businesses, it is important to take measures to minimise exposure to fraudsters and have a good security policy in place."
Simon Wallace, Centre for Economic and Business Research, said: "We are on the cusp of a potential boom in corporate identity theft. With almost universal computer usage and internet coverage in the business environment the potential for corporate identity theft is more significant than ever.
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"Those willing to hack, scam and defraud will find new and technically advanced methods to open up the necessary loop holes and steal a firm's identity. Business will need to adapt to this risk and must be willing to increase their spending on new and improved IT security systems in order to fend off attacks and stay one step ahead."
