The cost to UK firms of corporate identity (ID) theft, whereby fraudsters assume a company's identity in order to exploit its credit lines, empty its bank accounts or order assets in its name, is set to soar to £700 million a year by 2020 - a fourteen-fold increase on 2005 levels.

That is the conclusion of new research released today by insurers Royal & SunAlliance (R&SA) and the Centre for Economics and Business Research (CEBR), which found corporate ID theft is one of the fastest growing risks faced by UK firms and is set to mirror the current increase in personal identity theft.

The study assessed current risk trends through interviews with FTSE 250 firms and found that larger firms with over 250 employees and those located in London are most at risk from corporate ID theft, with the communications, banking, finance and insurance sectors likely to be the hardest hit.

A spokeswoman for RS&A said phishing attacks on firms and scams such as contacting Companies House to change company details or add another director were being used by fraudsters to ensure they can act in a companies name to order assets or open new credit lines. "From our research it is clear there is not a lot of awareness of the problem at the moment," she said. "But it is a major trend and already cost firms £50m in 2005 [according to the Metropolitan Police]."

Simon Wallace of the CEBR said the pervasive nature of internet connectivity and subsequent increase in corporate data breaches had made it far easier for fraudsters to gain the information they require to steal a company's identity. He added that firms need to recognise the threat, and invest more heavily in security systems and processes.

R&SA also unveiled a free guide to tackling corporate ID theft advising firms to undertake security checks for new employees; own all permutations of their company name; adopt best practices to ensure digital passwords are secure; and ensure all company stationery is shredded.

The R&SA spokeswoman said companies should also sign up to Companies House Monitor service, which notifies them if any changes to their details are requested.