Fraudsters Beware: More Organizations Are Using Analytics and AI Shields To Defend Against Fraud

GUEST BLOGGER

Ellen Joyner Roberson, CFE
Advisor, Global Marketing for Fraud, AML, & Security Intelligence, SAS

 Everyone likes a good superhero. I always like the ones who use their shields to fight off their enemies.

Superheroes are usually depicted as characters that have abilities greater than a normal person and they use them to accomplish good deeds. In his essay “More Than Normal, But Believable,” for the book “What is a Superhero?” Stan Lee said, “If the good guy is doing something that a normal human being couldn’t do, couldn’t accomplish, then I assume he becomes a superhero.” But isn’t that what people working in fraud and financial crimes try to do? We all bring our unique abilities in fighting crime so the world can be a safer, better place — and together we can accomplish more than one normal human can.

What shields are today’s fraud superheroes using to fight crimes?

In 2019, SAS and the ACFE published the Anti-Fraud Technology Benchmarking Report. We received over 1,200 responses to key questions around fraud and the use of technology. We’re releasing full updates to this report  early next year, but during International Fraud Awareness Week, we decided to share a sneak peek at some of the preliminary results.

Notably, 43% of organizations surveyed said they had accelerated their use of data analytics because of the COVID-19 pandemic. And 60% expect to increase their budget for anti-fraud technology in the next two years. I’ll frame this, and more results, through the lenses of our fraud superheroes.

 The fraud-focused business executive

The head of fraud and financial crimes is tasked with overseeing the company’s overall fraud strategy and ensuring practices comply with regulatory requirements. They need to stay ahead of fraudsters and their ever-evolving schemes while convincing the executive team to invest in appropriate resources. To do this effectively, they need to share budget reports and show ROI of the overall fraud strategy.

Over half the respondents in the ACFE survey use or are planning to use data visualization techniques in their day-to-day operations. Data and analytics-driven visualizations assist the fraud-focused executive in building the case for effective technology to safeguard the organization’s reputation and bottom line.

For example, one of our clients reported that using data analytics and visualization helped them reduce case alert volume by 40%, improve fraud detection rates by 35% and reduce false positives by 18%. With fewer false positives and the predictive scoring models, they can provide a better customer experience while detecting more fraud.

The fraud investigator

Fraud investigators spend much of their time using data and analytics to uncover fraudulent behavior, generating and exploring hypotheses, documenting case files, interviewing and presenting findings to policy makers, business units and management. They put extra effort into digging through irrelevant information and large volumes of data while struggling to find the right tools and training to complete cases effectively and efficiently.

Such ongoing struggles are echoed in the findings of the initial survey results. Responses showed that 69% of organizations identified staffing/in-house skills limitations as a challenge when implementing new anti-fraud technology. However, as stated before, more than 60% said they expect to increase their budget for anti-fraud technology in the next two years.

 We recently published a customer story from NC Department of Insurance, which recovered $6.9 million for the consumers of North Carolina. Their system uses SAS to support data intake and operational case management — enabling users to track investigations from intake through prosecution. Now they can monitor trends in real time, search and retrieve information, conduct link analysis and investigate every case that comes in.

The data wrangler

The data wrangler is another superhero in the fight against fraud — and one that’s sometimes overlooked. This person ensures that data is consistently used in a way that maximizes its value. It’s their job to exercise authority and control (planning, monitoring and enforcing) over the management of data assets. They need to identify and resolve data-related issues, define and manage business terminology, validate data values and other critical metadata, define and document business rules, data standards and data quality rules and ensure day-to-day and project-by-project data governance policies and initiatives are adhered to.

For organizations, it’s vital to employ data wranglers who understand what clean data looks like and how to shape raw data into usable forms. 

Data management is the shield that this superhero uses to improve how decisions are made about data, and how people and processes are expected to behave in relation to data. Anti-fraud technology suites, like our holistic solution, support a data strategy that gets the right data to the right users at the right time so data assets deliver maximum value. In turn, the organization can realize the full business value of enterprise data while adhering to policies and practices related to data access, governance, data protection and audits. 

The analyst or data scientist

The next generation of analysts are exploring new ways to augment human creativity and endeavors with AI. That’s in keeping with the ACFE survey results, which show organizations’ use of AI and machine learning has steadily increased over the years — and continues to rise. In 2019, 13% of organizations were using it. Now, 17% are using AI and machine learning. And 26% expect to adopt it in the next one to two years —  twice as many, in other words, will be using it soon (as compared to today).  

Large organizations are making big investments in analytics and artificial intelligence, and these initiatives are led by a new role — the head of data and analytics, or chief analytics officer (CAO). This role faces many challenges, starting with the acquisition and development of talent. As you’ll recall, 69% of organizations say that staffing and in-house skills are big limitations.

Many organizations that we work with are looking to embed AI capabilities into their everyday operations. By incorporating AI and advanced analytics, you’ll have more intelligent, automated solutions. From machine learning to computer vision to natural language processing (NLP), forecasting and optimization, AI technologies support diverse environments and scale to meet changing business needs.

Consider some examples:

  • Computer vision lets you automatically analyze and interpret what’s in a picture or video. Think of an auto claims fraud. With computer vision, it’s possible to distinguish between staged (fraud rings) and real auto damage.

  • What about the procure to pay life cycle? If you could bring all the advanced analytical techniques together, imagine how it would help analysts to build, gather, explore, visualize and manipulate data pertinent to their investigation? With a large set of scenarios and risk scoring rules, as well as previous behavior, they could predict certain outcomes. Auditors and procurement professionals could see when anomalies are triaged and subsequently dispositioned, then keep track of the outcome when improper payments or fraud are discovered. This is the work of analytic-driven decision making.

  • Research by the National Institute of Health suggests more than 40% of patients put themselves at risk by misunderstanding or just ignoring health care advice. To alleviate that, wearable technology devices exist in part to empower patients to take control of their health by making it easy to track vitals and keep tabs on important habits. Some have proposed devices that would be able to determine whether a patient has taken their medicine for the day, while other wearables may serve as a reminder to complete necessary daily treatments.

Better together

No matter what role you play in your organization, by working together with other fraud fighters and adopting emerging anti-fraud technology, everyone can be a superhero in the fight to keep fraudsters away from your organization and customers. Now is the time to put on your unique armor and look for new ways to make the world a safer place.

SOURCE: ACFE Insights – A Publication of the Association of Certified Fraud Examiners