MANAGING FRAUD RISK WITH EFFECTIVE USE OF DATA ANALYTICS AND TECHNOLOGY
R&C: In what ways is technology, such as data analytics, helping companies manage the risk of fraud? Are you seeing a rising appetite among companies to explore these solutions?
Zack: Technology, in general, is helping both sides in the battle – the fraudsters are becoming more sophisticated with some of their schemes and attacks, and companies are using technology better to fight the fraudsters. Nowhere is this more apparent than with data analytics, which is no longer limited to financial data. Analysis of structured and unstructured data drastically improves an organisation’s defences. Organisations are getting much more comfortable and efficient in their use of data analytics. But the appetite for analytics quickly wanes when it is not performed efficiently. For example, poorly designed analytics can result in large numbers of false positives. So, the key is to gradually develop a strategy for the deployment of analytics with well-designed tests.
R&C: What legal and regulatory requirements are having a significant impact on the fraud risk landscape? How can technology assist companies to achieve and maintain compliance?
Zack: Every year more countries and more government agencies recognise the value of compliance and ethics programmes, providing strong incentives in the form of significant reductions in penalties for organisations to implement these programmes. And one of the important elements of an effective compliance and ethics programme is an auditing and monitoring function aimed at early detection of compliance issues, including fraud. Alternatively, when organisations do little to prevent and detect wrongdoing in a timely manner, they pay the price either in the form of fraud losses or steeper penalties from government agencies. The bottom line is that government agencies now have a greater expectation of organisations to protect against fraud and other compliance issues.
Apr-Jun 2020 Issue
Society of Corporate Compliance and Ethics (SCCE)