The evolution of forensic investigations
Sections in the article:
1. The evolution of forensic investigations. Integrating human and machine intelligence
Fraud schemes continue to emerge, spread, and morph at blazing speed, fueled by technological advances and the ambition and creativity of unscrupulous actors. An axiomatic challenge that organizations face in detecting, investigating, and fighting fraud is that companies very well may be outnumbered by fraud perpetrators. Internal fraud alone costs the typical
organization five percent of annual revenue.1 As for the outside world, it’s teeming with crooks talented and motivated enough to pose danger, some with just connectivity and computing power.
2. Overcoming data challenges in forensic investigations. The foundation for integrated human and machine intelligence
Traditional corporate antifraud measures are quickly losing ground against fraud schemes that continue to grow in both frequency and ingenuity. Internal and external perpetrators draw from a menu of ploys, including procurement
fraud, employee expense fraud, financial statement fraud, bribery and asset
misappropriation, such as intellectual property and data theft. These threats alone provide impetus for companies to consider new approaches to
antifraud and enterprise risk management programs. However, compliance pressures are raising the stakes even more. Regulators increasingly expect companies to have controls and monitoring in place to avert fraud-related issues involving FINRA guidelines, Foreign Corrupt Practices Act (FCPA) compliance, Sarbanes-Oxley requirements, and other dictates.
3. Overcoming technology challenges in analytics-driven investigations. Building the engine of integrated human and machine intelligence
Technology challenges in fraud investigations. Advanced analytics are making inroads into fraud investigations, but these are still early days. Legal and compliance organizations continue to use various legacy systems to perform
data-intensive reviews. Analytics use cases tend to be ad-hoc ventures, typically performed by vendors. Tools are still maturing, a state that complicates long-term planning and investments.
4. Continuous fraud monitoring and forensic investigations. Acknowledging and addressing the risk of being blindsided
The challenges in combating fraud. The longer fraud perpetrators go undetected, the greater financial harm they cause. And, recovery becomes
more difficult with time. The duration of typical schemes amplifies the need for
continuous monitoring to uncover threats. Research has found more than
half of frauds continue at least 18 months before detection and nearly one-third go undiscovered for two years or more.
5. Forensic analytics in fraud investigations. Identifying rare events that can bring the business down
Enabled by advances in computing power and data management, forensic analytics is a critical capability in the future of investigations, the overarching theme of a five-part point of view series that concludes with this installment. Previous installments have explored other aspects of an analytics-driven fraud-fighting approach: the need for available and accurate data; the technologies
required to extract data and realize its value; and, continuous monitoring of
transactions and activities, a process that produces invaluable input for forensic analysis.