Why you’ve been looking at fraud all wrong – and four ways you can fix that

By Paul Clandillon : European Practice Leader, Counter Fraud and Financial Crime, IBM

  1. Elevate the importance of an enterprise approach to fraud protection for the business
  2. Pro-actively detect, and prevent financial crimes while accelerating investigations
  3. Leverage advanced analytics to rapidly confirm identities, relationships and valid transaction activity to reduce financial exposure
  4. Continuously adapt to every changing schemes by tapping into a multi-layered approach to analytics

Around 5% of global business turnover is lost to fraud, equating to around $3.7 trillion every year. But too many organisations still treat the issue as a departmental responsibility, keeping all operations related to tackling threats siloed within individual lines of business. Many organisations still don’t treat such a danger to global business with the gravitas it deserves - a potentially perilous mistake in an era when fraud is becoming more sophisticated .How can your business can change the way it looks at fraud?

1. Elevate the threat to enterprise level

By tackling fraud departmentally, businesses are hampering themselves as the data they are analysing is fragmented. Ascertaining the source of a potential threat and understanding its relationship to other parties in your business and the interactions of the entities concerned will provide you with a much deeper understanding of the true exposure you potentially face. Apply new styles of analytics to detect complex cross-channel fraud – such as Entity Analytics and Social Network Analysis – to provide an enterprise-wide view of your organisation and elevate fraud to a board level issue.

2. Shift from reactive to proactive

Nearly two-thirds of organisations still don't employ proactive approaches to counter fraud like advanced predictive analytics and social network analysis, which can ingest vast volumes of structured and unstructured data, as well as locate and alert you to potential threats before they happen. Finding the red flags in the data can cut fraud-related losses by up to 60% - businesses must ensure they’re equipped to read the signs.

3. Embrace advanced analytics

Analysing structured data is not enough to successfully tackle fraud. Businesses must widen their net and process unstructured data – such as documents and intelligence from internal and external sources – in order to extract information and identify non-obvious relationships and potential threats. Within this information is where the real insights reside. By utilising advanced analytics and natural language processing to interrogate both structured and unstructured data, organisations can glean context-sensitive insights to help stop threats before they occur.

4. Adopt a multi-layered approach

Businesses can lose revenue via non-malicious channels – such as error and waste – and malicious channels like cyber attacks and fraud. Combat these threats with a layered defence structure that is designed to protect businesses against all these issues simultaneously. In addition a single enterprise team should be on hand to identify, verify and neutralise fraudulent activity, using layered analytics that help combat the most complex of threats. 

With the right processes and people in place, organisations can be well equipped to fend off fraudulent activity – and protect their assets. Fraud is a significant threat to businesses – but it’s not an insurmountable one.

Discover how you can take a smarter approach to counter fraud


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