SAP Takes Aim at US$3.5 Trillion of Fraud

LAS VEGAS, March 19, 2013 /PRNewswire/ -- To help companies worldwide address the estimated US$3.5 trillion worth of fraud that occurs every year¹, SAP AG (NYSE: SAP) today announced the SAP® Fraud Management analytic application. Powered by the SAP HANA® platform, SAP Fraud Management aims to enable enterprises across industries such as insurance, public sector, banking, healthcare and utilities to detect, investigate, analyze and prevent irregularities or fraud in "big data" environments. The announcement was made at GRC 2013, being held March 19-22 in Las Vegas.

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The typical organization is at risk of losing up to five percent of its revenues to fraud¹. In 2011, the total potential projected worldwide losses due to fraud were $3.5 trillion¹. SAP Fraud Management is intended to help companies address potential, significant losses due to fraud; the high cost and effort for fraud investigation and false alarms; difficulties in keeping track of changing fraud behaviors; and the inadequate or obsolete detection capabilities associated with newer fraud patterns. As part of the broader portfolio of SAP solutions for governance, risk, and compliance (GRC), SAP Fraud Management is planned to be adaptable to unique business needs and varying industries, in order to:

• Detect fraud earlier to reduce financial loss: The application is planned to provide real-time detection that leverages the power of SAP HANA and offers robust integration capabilities into business systems, along with alert notification and management features
• Improve detection accuracy at less cost: SAP Fraud Management aims to help minimize false positives through real-time calibration and simulation capabilities on large volumes of data
• Prevent and deter fraud situations: With the combination of rules and predictive methods, SAP Fraud Management is intended to help users optimize fraud scenario analysis and adapt measures to changing fraud patterns to better prevent fraud

"The rise of big data is forcing organizations to improve their governance, risk and compliance efforts. Being able to validate who did what, and provide a defensible audit trail, is key in addressing potential fraud," said Michael Rasmussen, chief pundit, GRC 20/20. "There is a potential for organizations to face massive loss due to fraud. This is becoming even more of a risk with the ever-increasing amount of data being generated. Helping customers detect even a fraction of these cases would represent significant savings — employing advanced solutions to help detect and deter fraud makes sense."

A Compelling Case for the Insurance Industry
Fraudulent insurance claims and associated costs are at historical highs. In the U.S., insurance companies are faced with non-health-related insurance fraud of more than US$40 billion per year, while the Association of British Insurers cites more than 2,500 fraudulent claims per week, totaling more than GPB 900 million per year². Insurers can no longer afford traditional fraud detection methods with low recovery rates. Developed with leading international insurance companies in a co-innovation development model, the SAP® Fraud Management for Insurance analytic application is planned to offer:

• Closed-loop fraud processing: detection and prevention of claim fraud across multiple line of business with direct impact on the loss ratio
• Seamless Integration: real-time information flow between fraud and claim processing in both directions to help ensure consistency and optimized process flows
• Optimized Investigation: intuitive functionality and alerts, supporting investigators from first fraud signal to final decision

SAP Fraud Management for Insurance is intended to help insurance companies automate fraud detection, improve fraud investigation efficiency and avoid payments on illegitimate claim requests.

Savings for Government At All Levels Through Early Fraud Detection
Tax evasion and social services fraud not only hurt the reputation of government agencies, but contribute to ever-increasing budget deficits. SAP Fraud Management is planned to help reduce fraud and non-compliance by cross-checking tax returns or social service applications against millions of related data records in real time and immediately spotting whether the submitted applications match information from other data sources. Applying predictive algorithms from SAP HANA on a large number of transactions aims to uncover hidden fraud patterns and produce alerts on suspicious transactions that might be missed by conventional fraud and compliance rules.

"With organizations at risk of losing five percent of their revenues due to fraud, companies need better analytical tools to identify and prevent fraud before losses occur and to stay apace with changing fraud behaviors — in real time," said John Schweitzer, senior vice president and general manager, Analytics, SAP. "SAP Fraud Management powered by SAP HANA will enable enterprises in all industries to detect, investigate, prevent and monitor irregularities or fraud in environments with ultra-high volumes of data, from both SAP and non-SAP systems. With SAP HANA as its backbone, SAP Fraud Management aims to bring unprecedented processing capabilities."

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About SAP
As market leader in enterprise application software, SAP (NYSE: SAP) helps companies of all sizes and industries run better. From back office to boardroom, warehouse to storefront, desktop to mobile device – SAP empowers people and organizations to work together more efficiently and use business insight more effectively to stay ahead of the competition. SAP applications and services enable more than 232,000 customers to operate profitably, adapt continuously, and grow sustainably. For more information, visit www.sap.com.

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