BI and the Chicken Pot Pie - Everyday Recipes for Business Intelligence and Performance Improvement

Organizations are looking for new ways to detect fraud because the fraudsters are getting more savvy and depressed economic factors are driving fraud innovation. Harsh, but unfortunately it is true. SAS’ Ellen Joyner on the panel said global fraud costs are estimated to be as high as $300 billion annually.

Today’s fraudster sophistication requires that organizations more quickly adopt different rules and approaches - the traditional rules based approach as a stand-alone method is ineffective. You also have to be vigilant to new or growing areas of fraud. For example, employee and occupational fraud, breakout fraud and identity fraud are all on the rise.

In the midst of more savvy fraudsters, more types of fraud and the economic pressures incenting new players to join the fraud game, organizations have to look at ways to cut costs of fraud detection. Reducing false positives was one of the challenges raised by the SAS panel that was also covered in de Medinaceli’s presentation last week. Also improving business processes that manage the fraud detection and management framework can help reduce expenses, make the detection process more accurate and improve performance. SAS’ Cameron Jones shared an overview of SAS' latest offering, SAS Enterprise Case Management, to help streamline investigations.

Chris Swecker, a consultant that specializes in Financial Crimes and Money Laundering, was a very engaging participant. His perspective was insightful (coming from someone who doesn’t focus on criminal activity other than I do watch NCIS). Some points that Swecker shared:

• Organizations need to address fraud as an enterprise. When addressed in silos it leaves your organization more vulnerable to attack – you aren’t really protecting yourself effectively if you aren’t looking at fraud from an enterprise perspective.

• Every institution has to have fraud alerts, monitoring and an active strategy for fraud management.

• Any time organized activity is identified, it is almost always criminal – society views networked criminal activity as more dangerous to the business. Look at malignant social networks and the extended crime relationships – if not, it’s like playing whack-a-mole.

• Usually a fraud ring involves insider selling data or knowledge.

What about the next fraud opportunity?
In both the de Medinaceli presentation and yesterday’s SAS fraud panel, I didn’t hear a whole lot about the future of fraud detection. How do you see the trends in what is coming up next as far as types of fraud, ways to fraud? I was hearing a lot about the way to detect fraud happening today. What are the next year, 3 year, and 10 year fraudsters going to look like? For that matter what skills, knowledge and technology will that next generation fraud detective need?

I am not sure we as a society, as businesses or as individuals effectively address fraud risk at the onset of a policy, a business plan or a new venture. Perhaps it is because to think about the holes we have left open for being taken advantage of are a negative way to think about a potentially positive experience? Perhaps it would expose weaknesses we just don’t want to see?

I have enjoyed the various perspectives on fraud the past couple of weeks and it has me thinking about how we can detect what is next? How can analytics and behavioral science teamed with technology and forensic science help us predict the next pattern, the next hole in our armor? How can rigorous business process review and planning help us identify potential holes BEFORE we find a problem with the ever wily fraudster?

It’s a tasty problem to ponder.