Fraud encompasses every part of our lives, from squandering tax money to hiking consumer goods and service prices to taking away resources from necessary innovations and costing human lives.
Fraud is improper payments, waste and abuse, terrorist financing, money laundering, cybersecurity, and public security. Fraud prevention in the past used rudimentary analytics and business rules in looking for anomalies and using separate data sets to create alerts. Investigators could only monitor transactions when they were done.
Fraud prevention was only detectable in healthcare when the payments were made, and the criminals were long gone.
Importance of Fraud Prevention
Fraud Causes Disastrous Losses.
It’s rare to have fraud cases that threaten your business’s existence, but they do happen, especially in the digital world, where everything can turn around overnight. Other than threatening your business financially, fraud imposes reputational, financial, brand loyalty strains once exposed.
Fraud is Common
research by ACFE has found that a typical organization loses about 5% of its revenues each year. The organization loses about $ 145,000 in every fraud case. Fraudulent activities are not discovered immediately. It’s therefore important that an organization puts in place a fraud prevention program that widens the probability of discovering the crime on time.
“Known Unknown” Organizations Vulnerability to Fraud
An organization will only discover their fraud vulnerabilities if they have implemented a designed fraud prevention program. The program is critical because it is first a process of discovering your vulnerabilities and second because it helps prevent future frauds.
Fraud Prevention Boosts an Organization’s Confidence.
Auditors, investors, and partners are confident in an organization if it can implement a strong prevention program. Implementing a fraud prevention program means an organization is ready to fight both internal and external fraud and make the organization a better supplier, business partner, and investment.
How Fraud Prevention Works
Fraud prevention is a process that involves case management, monitoring, decisions, detection, and feeding the improvements back to the system in the fight to find fraud prevention solutions.
Today fraud prevention uses technology in predicting conventional tactics, deciphering sophisticated fraud rings and uncovering the newest schemes.
The technology applies adaptive and predictive techniques that include machine learning, a form of artificial intelligence. A combination of risk profile analysis and real-time monitoring as fraud prevention methods has turned the tides of losses.
Exposing and preventing fraud is becoming very complex because of the growing complexities of basement bad guys, state-sponsored terrorism, and professional criminals.
Fraudsters develop sophisticated tactics every day; organizations must prioritize fraud detection and prevention. Fraud detection today involves finding abnormalities by matching data points with activities taking place in cyberspace.
In finding fraud prevention solutions, organizations are advised to
- Continually monitor social networks, transactions, and other high-risk anomalies and enable real-time decisions, apply behavioral analytics.
- Capture available data across departments and channels, unify and incorporate them into an analytical process.
- Use data visualization and start an enterprise analytics culture that will include investigative workflow optimization at all levels.
- Adopt layered security techniques in their systems.
The upsurge of the digital economy now matches the rapid spread of cybersecurity and fraud risks. Governments and businesses alike need to embrace technologies like artificial intelligence and data visualization to reduce and prevent fraud’s reputational and economic repercussions.
Investigators and analysts from Verint work together to score and prioritize alerts based on how severe they are and break down silos. The high-priority alerts are then routed for in-depth analysis.