Mitigating AI fraud risks | Deloitte US has been saved
By Ryan Hittner, Audit & Assurance Principal, Deloitte & Touche LLP, and Kirk Petrie, Audit & Assurance Managing Director, Deloitte & Touche LLP
Over the past year, we’ve seen a flood of stories about the impressive benefits artificial intelligence (AI) can bring to businesses. But with this rush of AI exuberance, are we overlooking the potential for new types of AI-enabled fraud and criminal activity?
Thanks to Generative AI (GenAI), bad actors now have access to sophisticated tools that can execute more complex fraud schemes on a large scale, potentially evading traditional detection methods. In a new report, Deloitte’s Center for Financial Services predicts that GenAI could drive a substantial increase in fraud losses in the United States: from some $12 billion in 2023 to $40 billion by 2027.
As GenAI-enabled fraud schemes evolve, here are a few examples of the fraud we’re already seeing:
Beyond financial losses, AI-enabled fraud can put an organization’s trust, credibility, and brand at risk. If a company fails to protect its stakeholders or itself, it can lose the confidence of customers, investors, employees, and other stakeholders.
So how can companies protect themselves? Deloitte has identified some specific steps your organization can take to bolster your fraud risk management framework and defend against AI-enabled fraud.
Deloitte can advise you on identifying and responding to AI-enabled fraud. We have extensive experience with fraud risk management, the three lines of defense model, and other fraud prevention measures. To learn more, reach out to Ryan Hittner or Kirk Petrie.
This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.
The services described herein are illustrative in nature and are intended to demonstrate our experience and capabilities in these areas; however, due to independence restrictions that may apply to audit clients (including affiliates) of Deloitte & Touche LLP, we may be unable to provide certain services based on individual facts and circumstance.
Ryan is an Audit & Assurance principal with more than 15 years of management consulting experience, specializing in strategic advisory to global financial institutions focusing on banking and capital markets. Ryan co-leads Deloitte's Artificial Intelligence & Algorithmic practice which is dedicated to advising clients in developing and deploying responsible AI including risk frameworks, governance, and controls related to Artificial Intelligence (“AI”) and advanced algorithms. Ryan also serves as deputy leader of Deloitte's Valuation & Analytics practice, a global network of seasoned industry professionals with experience encompassing a wide range of traded financial instruments, data analytics and modeling. In his role, Ryan leads Deloitte's Omnia DNAV Derivatives technologies, which incorporate automation, machine learning, and large datasets. Ryan previously served as a leader in Deloitte’s Model Risk Management (“MRM”) practice and has extensive experience providing a wide range of model risk management services to financial services institutions, including model development, model validation, technology, and quantitative risk management. He specializes in quantitative advisory focusing on various asset class and risk domains such as AI and algorithmic risk, model risk management, liquidity risk, interest rate risk, market risk and credit risk. He serves his clients as a trusted service provider to the CEO, CFO, and CRO in solving problems related to risk management and financial risk management issues. Additionally, Ryan has worked with several of the top 10 US financial institutions leading quantitative teams that address complex risk management programs, typically involving process reengineering. Ryan also leads Deloitte’s initiatives focusing on ModelOps and cloud-based solutions, driving automation and efficiency within the model / algorithm lifecycle. Ryan received a BA in Computer Science and a BA in Mathematics & Economics from Lafayette College. Media highlights and perspectives First Bias Audit Law Starts to Set Stage for Trustworthy AI, August 11, 2023 – In this article, Ryan was interviewed by the Wall Street Journal, Risk and Compliance Journal about the New York City Law 144-21 that went into effect on July 5, 2023. Perspective on New York City local law 144-21 and preparation for bias audits, June 2023 – In this article, Ryan and other contributors share the new rules that are coming for use of AI and other algorithms for hiring and other employment decisions in New York City. Road to Next, June 13, 2023 – In the June edition, Ryan sat down with Pitchbook to discuss the current state of AI in business and the factors shaping the next wave of workforce innovation.