How CFOs are building new-age fraud investigation capabilities

BECAUSE we live in a digital world, fraudsters leave a digital trail almost every single time. This makes it easier for investigators to “catch” the thief or at least find out how the fraudulent transactions were executed.

Today’s sophisticated analytics solutions and “machine intelligence” not only helps close the loopholes that fraudsters exploit but also plays a significant role in how perpetrators are tracked down when they drain a company of its resources.

However, there are barriers to using such technology. Investigation professionals may not know how to use or may resist using new technology and replacing existing technology might be complicated and expensive.

According to a recent Deloitte report, technology challenges are not unique to legal and compliance organizations. Indeed, each technology-enabled directorate in a given organization will likely have had to face and overcome such universal challenges.

The way to do that is to leverage a broader ecosystem of strategy, process, people, and data considerations.

• Strategy defines the business problem to be solved.
• People get the technology solution up and running.
• Processes comprise of the steps in solving the problem, and
• Data informs activities across the ecosystem.

CFOs are building new-age fraud investigation capabilities by nurturning the four components of the ecosystem. Here’s how Deloitte explains the components that make up this ecosystem to help those trying to get a leg up on fraudsters and the competition:

Strategy:

Strategy aligns the investment in technology with key legal and compliance priorities.

Think through the dynamics of fraud threats and how to respond to them to develop a solution roadmap and testing framework ahead of technology acquisition.

Businesses often prefer to establish a proof of concept based on risks, regulatory gaps, and recent industry issues, and then decide on investing in newer, longer-term solutions that can be scaled up over time. For best results (and to ensure adoption), the business unit that will be using the technology should drive the initiative.

People:

Questions about “usability” of a technology investment, whether legal and compliance, as well as other business stakeholders, play in analytics adoption and deployment.

With the affected business unit taking the lead, other organizational stakeholders should be involved in determining who will use the technology for the development of analytics and review of results, how they will be trained, and how usability and accessibility issues will be addressed.

Process:

One important benefit of an analytics solution is that it can uncover insights that facilitate improvements in day-to-day business processes.

Understanding which processes will need to change and how is what will help you formulate a solution roadmap.

Often, the results of forensic investigation don’t receive the attention they deserve. Make sure you pay extra attention to how the solution will be sustained, including how you create a feedback loop that helps guide technology enhancements and adjustments in how people do their jobs.

Data:

Data needs to be analyzed and interpreted in the context of the business problem being solved, it’s a critical piece of the puzzle and the ecosystem.

Data management helps determine and monitor the data sources being used while data and text mining uncovers insights using tools such as predictive analytics, text analysis, model assessment and tuning, and visualization.

While legal and compliance teams themselves may have limited analytical capabilities and resources, the types of tools they need are often widely used elsewhere in their organization.

Marketing departments mine data to segment and target customers. Internal audit teams sample transactions with database tools. Supply chain professionals use visualization tools to manage logistics.

Legal and compliance teams can benefit from exploring potential technology-sharing opportunities and synergies across the business to reduce costs and leverage existing investments while devising and ramping up a solution that fits their domain. However, it will require them to overcome a learning curve to understand and make effective use of those tools.

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