The Fraud Challenge

The Growing Fraud Issue
Fraud accounts for about 5% of loss in many organizations. Understanding who does it, why they do it, what it is they do and how they do it is key to mounting an appropriate response and protective shield for your organization. Organizations need a fraud management plan to detect, identify and remediate any fraud threat that presents itself. The risk of loss be it intellectual property, money, or other assets requires a management approach that balances risk loss with likelihood and impact of fraud.

What should you know About fraud?
Responding to the fraud challenge depends on how well an organization does its fraud management. Fraud management is about preparing a cohesive approach to the types of fraud that threaten an organization. Fraud today is more than attempts to damage an organization. Fraud is also extending to personal computers because of the large numbers of remote workers that are now active and connected to the organizations they work for. There are several different types of fraud. The different types of fraud tend to dominate certain types of organization.

What can you do about it?
Learn about the well-known methods and tools that deal with fraud and its related risk. Answer key questions such as:

• What is the difference been theft and fraud?
• When does theft become fraud?
• What is compliance fraud?
• Is intellectual property theft also fraud?
• Does personal laptop hacking threaten your organization?
• How can you detect anomalies that point to fraud?

These and other questions are answered in this course. A knowledge of the fraud cycle assures that good value is achieved from the fraud management efforts.

• Fraud Challenge - disabled> download

Responding to the fraud challenge depends on how well an organization does its fraud management. Fraud management is about preparing a cohesive approach to the types of fraud that threaten an organization. Fraud today is more than attempts to damage or removal of assets from an organization. Fraud is also extending to personal computers because of the large numbers of remote workers that are now active and connected to the organizations they work for.

Section 1.1: The Stages of Fraud Management

• What does it take to manage fraud?
• Anticipation – Where will fraud occur?
• Identification – Anomaly detection
• Validation – Is it really fraud?
• Neutralization – How do you counter fraud?
• Video Discussion – Why Worry About Fraud

Section 1.2: Fraud Anticipation- Types of Fraud

• The scenario approach
• Internal fraud
• Illegal acts, theft, embezzlement, financial fraud
• External fraud
• Customer, Supplier, Branch, Distributor, Third party
• Transaction fraud, cyber fraud, and hacking
• Compliance
• Governance, Risk and Regulation
• Personal fraud
• Remote Work, Local Data, Linked Organization Indirect Access
• Video Discussion – Looking for Fraud

Section 1.3: Fraud Anticipation – The Risk Assessment

• A key starting point – Identifying fraud risk
• Building a risk register
• Quantifying the risk
• Risk analytics
• What does it take to manage risk?
• Demo Example – Ranking Risk

The idea of detecting fraud is based on analyzing patterns related to money, quantities and language which is the semantic approach to anomaly detection. The simple approach is to look for exceptions but the people committing fraud are smart and adaptive and will probe your organization looking for ‘soft spots’ or weaknesses to initiate fraud. Some anomalies are normal, and some may be fraud. Differentiating them is a key to successful fraud management.

Section 2.1: Detecting Fraud through patterns

• The scenario approach to patterns
• Patterns in Data/Documents
• Controls and Behavior
• Critical time frames for response
• Operating unit response versus integrated response
• Video Discussion – Analyzing Patterns in Fraud

Section 2.2: Anomaly Detection with Data Patterns

• Anomaly detection
• An anomaly detection example
• The transaction funnel idea
• Data analysis for fraud
• Identifying false positives and exceptions
• Hacking and external penetration
• Exercise and Discussion – Looking for Fraud in Transactions

Section 2.3: Semantic Anomaly Detection

• When do you use linguistic anomaly detection?
• Contract and agreements
• Strategic plans
• Names and text entries
• Linguistic (semantic) Analytics
• Keyword, semantic comparisons. Phrase and text field analysis
• Demo Discussion – Finding Hidden Risk with Semantic Analytics

The goal of fraud is to conceal the truth, the goal of fraud validation is to identify the truth, expose and report the fraud. So, there is a need to provide a validation approach that sorts the ‘red flags’ into real attempts of fraud and false positives. There are several algorithms to sort potential fraud action. Often, a combination of algorithms is needed. This needs to be done across internal organization.

Section 3.1: Sorting Through Red Flags

• Data – Confirming Transactions
• Documents – Checking Fields for Validity
• Critical time frames for response
• Operating unit versus integrated view
• Exercise and Discussion – Identifying ‘Red Flags’

Section 3.2: Theft versus Fraud

• The theft/fraud overlap
• Uncovering concealment
• Controls and Behavior – Policies and Procedures
• Compliance review
• Legal review – contracts, agreements, conditions, licenses
• Video Discussion – The Fraud Audit

Section 3.3: Getting the Experts Involved

• The validation register = – The list of experts
• Validation procedure
• Validating the validation – The double check
• Validation and refutation
• AI and validation
• Topic Discussion – How many experts do you need?

Eventually you want to neutralize the fraud and put in place barriers to that type of fraud and related fraud approaches. Once blocking mechanisms and remedial actions by management are installed you can audit to see if these procedures are being followed. Further, you want to add better, more automated, and more rapid detection methods. Periodic or event-based review and update of the fraud management plan is needed to make this work.

Section 4.1: Fraud Management Planning

• The fraud management plan
• The fraud connection
• People, Transactions, Organizations, Targets
• Common fraud target:
• Invoices, Purchase Orders, Payments
• Linking patterns of fraud across distributors
• The dashboard for fraud management
• Threat, response, trends
• Example Discussion – Tracing Fraud

Section 4.2: Preventing Threat Extension

• Fraud across organizations
• Organizations, partners, distributors
• Customer oriented threats
• Partner threats
• Competitive threat and intellectual property
• Espionage in business and government
• Video Discussion – The Methods of a Hacker

Section 4.3: The Proactive Approach

• Revisiting Scenarios – Anticipating new threats by Adapting
• Tightening controls – Raising fraud awareness
• Fraud recovery, assets, property, money
• Rolling plans
• The rapid response team
• Final Q&A – Open Questions About any Fraud/Theft Topic

This course is key must for business managers, strategic planners, marketing analysts, planning managers, process analysts, business analysts, data analysts and business architects.

Certificate of completion

Digital certificate - Included