The UK's financial services watchdog reveals that larger financial firms have been taking steps to boost their fraud management capabilities in a bid to counter the threat.
The most common example of insider fraud identified by companies was "incidents of staff being approached outside work and offered money to sell confidential information".
The Financial Services Authority (FSA) suggests that companies can go further to protect both themselves and their customers from fraud. The agency recommends collecting more detailed and accurate data and improving systems and controls for detection.
An investigation into fraud risk and how it is being tackled by senior management in 16 financial services groups discovered that executives tend to recognize that the threat of fraud is growing and must be managed effectively.
Philip Robinson, financial crime sector leader at the FSA, commented: "Fraud threats are dynamic and fraudsters constantly devise new techniques to exploit the easiest target. Firms need to continue to invest in systems and controls and manage their responses to fraud in order to avoid being targeted as the weakest link."
The report praises increased industry co-operation against fraud and improved employee vetting procedures for helping to tackle the problem and recommends that thorough vetting should be applied to all staff, including temporary employees.