How do smart government organizations prevent fraud and improper payments? You might imagine they go after the bad guys one at a time - but technology is making it easier to identify networks of criminals with similar behaviors and even predict when certain behaviors are likely to start appearing.

This fraud prevention strategy was summed up by a panelist at the June 12^th SAS Government Leadership Summit who said, “We were trying to detect fraud incidents one at a time.  But you have to hunt down fraud and look for networks.”

As the Industry Marketing Manager for Federal Civilian Government at SAS, one of the areas I keep a close eye on is fraud and improper payments.  In recent years, I’ve seen substantial growth in government fraud activity.  Each year, billions of tax dollars paid by hard-working citizens are lost to improper payments due to fraud, error, waste and abuse.  For fiscal year 2011, the U.S. federal government reported $115 billion in improper payments.  To reduce these losses, the government must analyze massive amounts of data to derive insights from information quickly.

These and other issues were discussed in the panel discussion entitled, “Using Analytics to Predict and Prevent Fraud and Improper Payments." The panel was moderated by Chris Swecker, Principal, Swecker Enterprises and Former FBI Assistant Director, Criminal Investigative Division.  Panelists included:

• Bryan Jones, Director, Data Mining Group, US Postal Service Office of Inspector General, Chief Technology Office.
• Edward Slevin, Director, Computer Assisted Assessment Techniques (CAATs), US Department of Education, Office of Inspector General.
• Rory Schultz, Director, Information Technology Division and Chief Technology Officer, Department of Agriculture Food and Nutrition Service.

Each of the panelists has responsibilities for areas that depend heavily on analytics. I came away with these key insights from the panel discussion:

• Agencies are integrating various data sources to reduce the likelihood of false positives and improve oversight activities.  The more agencies share data, the better they will become in detecting and deterring fraud and improper payments.
• Agencies are improving their audits and investigations by going beyond individual views to analyze all activity at a network dimension to uncover fraud rings and other previously hidden relationships and suspicious patterns of behavior.  Through a successful pilot program using SAS analytics, one organization was able to identify 40 fraud rings.
• Analytics are enabling a holistic view of fraud by automatically linking entities and breaking down operational and data silos.  One agency built a foundation system using SAS and was able to identify fraud rings for 16 institutions.

It’s always educational to hear from the practitioners themselves, and the audience learned how analytics can help detect and deter fraud and improper payments with speed and accuracy -- moving from a pay and chase to predict and prevent environment.