Whilst it’s true that cybercriminals are becoming more creative and sophisticated, as are analytical techniques and the experts that wield them. Fraud Analysts now have more techniques and reach than ever, and as incidents of cybercrime increase, this isn’t an area that businesses should be scrimping on.
According to PwC’s Global Economic Crime and Fraud Survey 2022, 46 per cent of organisations surveyed reported experiencing fraud or financial crime over the last 24 months and tech, media and telecommunications businesses appeared to have taken the brunt. Findings showed that nearly two-thirds of this group experienced some form of fraud, the highest incidence of any industry.
The ONS also recently released stats showing that fraud offences increased by 25 per cent in 2021 (to 4.5 million offences) compared with the year ending March 2020. Indeed, the proportion of these incidents that were cyber-related increased to 61 per cent up from 53 per cent.
The rise of cyber-fraud is a clear issue and for some businesses such as financial institutions, tackling this by using fraud teams made up of expert Fraud Analysts is the norm. But for others, it may not have been seen as a priority until recently. However, any business which has a growing number of online transactions will become a bigger target for fraudsters and would benefit from a team member able to help minimise the risk.
So, how can fraud analysts help?
Far from wanting to paint a bleak picture, while fraud techniques are evolving and improving, so are anti-fraud efforts. All risks associated with financial crime involve three kinds of countermeasures: identifying and authenticating the customer, monitoring and detecting transaction and behavioural anomalies, and responding to mitigate risks and issues. All of these are carried out by fraud experts, such as Fraud Analysts, armed with ever-evolving technologies and techniques. So, what exactly does a Fraud Analyst do?
Fraud Analysts will track and monitor transactions and activity, identify and trace any suspicious or high-risk transactions, determine if there is improper activity involved, and identify if there is any risk to the organisation or its customers. They are able to digest huge swathes of information and quickly and efficiently prioritise the data that’s important in order to tell a story of fraud or no fraud.
To cope with the speed and scale of online commerce, new technologies such as Machine learning (ML) models have come to the fore. These models have the ability to simulate thousands of scenarios and take over the mundane tasks of sifting through swathes of data in a tiny percentage of the time it would take a human. The systems used by Fraud Analysts will vary based on the industry, but a common example is rule-based expert systems (RBESSs). A very simple implementation of artificial intelligence (AI) RBESSs are used to detect fraud by calculating a risk score based on users’ behaviours, such as repeated log-in attempts or ‘too-quick-for-being-human’ operations. Based on the risk score, the rules deliver a final decision on each analysed transaction, therefore blocking it, accepting it, or putting it on hold for analyst’s revision. The rules can be easily updated over time, or new rules can be inserted following specific needs to address new threats.
This method has proved very effective in mitigating fraud risks and discovering well-known fraud patterns. That said, rule-based fraud detection solutions have demonstrated that they can’t always keep pace with the increasingly sophisticated techniques adopted by fraudsters, without regular updates and expert use.
Machines also cannot mimic human traits like intuition. People can detect if things aren’t right even if they have not seen them before. It’s an instinct not yet successfully trained into machines. Therefore, new trends are much better pursued by an analyst and then a machine can be trained to stop future occurrences. A well-implemented ML system will free up precious time for an analyst to perform these more productive tasks.
A non-stop process
So, your Fraud Analyst has now set up a new ML system to identify fraudulent activity and is also looking for new trends that fraudsters may be trying – now what? Fraud Analysts never sit still. Their job is not a one-time fix but one of constant evolution and refinement. Their role involves identifying weaknesses in systems and continually looking for opportunities for improvement, such as recommending anti-fraud processes to detect new patterns or new software tools to help with reporting. Their finger is always on the pulse of emerging developments and will ensure your company remains protected against current risks.
Not only is this aspect part of the job description, but it is also to some extent inherent to their nature. Fraud Analysts tend to be curious, have a strong attention to granular detail, as well as an inclination towards problem-solving. Leaving no stone unturned is part of their makeup. This analytical skillset will dig out any problems that are there – which will unfortunately then require you to fix them (sorry!) – but it is far better to be aware of any weaknesses now. The majority of companies only realise their shortcomings when it is already too late. Ultimately it is better to be safe than sorry.
A Fraud Analyst not only helps to protect businesses against creative cyber criminals but will also give owners reassurance as they look to grow and thrive unimpeded.
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