Key Takeaways
- Government CISOs and other leaders need to shift their focus from technical security jargon to financial fraud, AI-generated scams, and citizen trust.
- AI-enabled cyber attacks are on the rise, with estimated costs of $10.5 trillion annually by 2025.
- Collaboration with auditors, implementation of controls to fight identity fraud, and deployment of AI solutions are crucial in combating online financial fraud.
- Government leaders must prioritize cybersecurity investments and make a compelling case for new investments despite budget cuts and staffing challenges.
- The use of AI-generated fraud is becoming increasingly prevalent, with estimated losses of over $12.5 billion in 2024.
Introduction to the Problem
Attention all government CISOs, CTOs, CIOs, CFOs, COOs, and CEOs: it’s time to adjust your cyber lingo. The focus should shift from technical security jargon to financial fraud, AI-generated scams, citizen trust, due diligence, reputation, protecting identities, cybercrime, data integrity, and AI-solutions. The reason for this shift is that numerous state and local government security leaders are facing budget cuts, staffing shortages, hiring freezes, and an inability to make a compelling case for new cybersecurity investments. Meanwhile, bad actors are ramping up online fraud schemes that take advantage of identity management flaws, stolen credentials, and network vulnerabilities.
The AI-Generated Fraud Problem
The problem of AI-generated fraud is becoming increasingly prevalent. National headlines and local news stories highlight the urgent problems emerging related to online financial fraud, ranging from social engineering attacks against individuals to sophisticated money scams hitting seniors and state and local government services. According to GAO.gov, there was over $300 billion in fraudulent payments within pandemic-relief programs. The Federal Trade Commission data shows that consumers reported losing more than $12.5 billion to fraud in 2024, which represents a 25 percent increase over the prior year. AI is making these problems worse, with cybersecurity vendors predicting that cybercrime will cost the world $10.5 trillion annually by 2025.
The Importance of Collaboration
To combat online financial fraud, government leaders must collaborate with auditors and implement controls to fight identity fraud. This can be achieved by prioritizing controls that assume the trust layer is compromised, such as payment verification, identity analytics, and endpoint integrity. The Microsoft Digital Defense Report for 2025 provides valuable insights and recommendations on fraud, scams, and identity management. Additionally, the SecureWorld Expo recommendations, such as implementing controls that assume the trust layer is compromised, can help prevent identity fraud. It is essential to work with government auditors on these fraud-fighting efforts and to examine report details from relevant sources.
The Role of AI Solutions
AI solutions can play a crucial role in stopping online fraud and saving millions. Government leaders must re-examine who they are talking to about these issues and ensure that AI solutions are addressing real business needs. The use of AI-enabled cyber attacks has crossed a major tipping point, and vital questions have emerged regarding how prepared organizations are to defend critical data, systems, and networks. It is essential to get the cyber team involved in efforts to find and eliminate fraud in government programs and to work with auditors on these efforts.
Final Thoughts
The time to act is now. Government CISOs and security leaders must lead the solutions to the AI-generated fraud narrative, and waiting is not a viable option. While there are aspects of financial fraud that are outside the domain of CISOs and security leaders, such as prosecuting criminals by law enforcement, it is clear that security leaders need to be part of the effort to fight online financial fraud in their government. By prioritizing cybersecurity investments, collaborating with auditors, and deploying AI solutions, government leaders can make a compelling case for new investments and combat the growing threat of AI-generated fraud. The security leaders who are struggling with major resource issues must be supported, and the effort to fight online financial fraud must be a collective one.
