As Fraud Increases and Becomes Harder to Detect, 1 in 5 Don't Use Analytics or Rare Event Modeling to Fight it

Dec 14, 2015, 09:30 ET from Deloitte

NEW YORK, Dec. 14, 2015 /PRNewswire/ -- Fraud is expected to increase during the next year (24.9 percent) and became tougher to detect during the past year (31.4 percent), according to a recent Deloitte online poll. Yet, one-fifth of respondents (20.8 percent) don't use analytics or rare event modeling in their anti-fraud programs.

"Fraudsters are getting smarter, but tools to identify schemes earlier are advancing, too," said Shuba Balasubramanian, Deloitte Advisory principal in advanced analytics, Deloitte Transaction and Business Analytics LLP.  "We see increasingly more organizations using advanced analytics for rare event modeling.  Identifying anomalies — possibly fraud, waste or abuse — earlier than ever before can help stem financial losses and negative brand impact."

Kirk Petrie, Deloitte Advisory principal in advanced analytics, Deloitte Transaction and Business Analytics LLP, added, "When done well, analytics and rare event modeling accelerate fraud prevention and detection efforts. Good execution often involves executive leadership, legal, finance, risk, compliance — along with data scientists — so that faint signals of fraud can be identified and organizational improvements made.  Unfortunately, few companies currently involve data science in their compliance directorates."

Findings indicate the biggest challenges to using fraud analytics effectively are lack of resources (29.6 percent), treatment of fraud analytics as an IT issue, not an organizational priority (15.1 percent) and inability for leadership to understand the value (10.5 percent).

About the online poll
More than 3,060 professionals responded to poll questions during a Sept. 22, 2015 webcast, titled "Managing fraud in the digital era: Channeling faint signals amid the noise." Respondents work in a range of industries including commercial and industrial products (32.5 percent); financial services (27.5 percent); and technology, media and telecommunications (9.6 percent).

About Deloitte Advisory
Deloitte Advisory helps organizations turn critical and complex business issues into opportunities for growth, resilience and long-term advantage. Our market-leading teams help our clients manage strategic, financial, operational, technological, and regulatory risk to maximize enterprise value, while our experience in mergers and acquisitions, fraud, litigation, and reorganizations helps clients move forward with confidence.

As used in this document, "Deloitte" and "Deloitte Advisory" means Deloitte & Touche LLP, which provides audit and enterprise risk services; Deloitte Financial Advisory Services LLP, which provides forensic, dispute, and other consulting services; and its affiliate, Deloitte Transactions and Business Analytics LLP, which provides a wide range of advisory and analytics services. Deloitte Transactions and Business Analytics LLP is not a certified public accounting firm. These entities are separate subsidiaries of Deloitte LLP.  Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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