As fast as Big Data tools and techniques improve, fraudsters are still keeping one step ahead and managing to illicitly obtain corporate information and funds, warns KPMG. To counter the threat, KPMG’s UK and EMA Leader for Data & Analytics calls on companies to move towards a more analytical workforce, arguing that doing so will make it significantly easier to spot the anomalies which can often indicate fraud or improper conduct – and ultimately catch the fraudsters.
According to Eddie Short, it is possible to analyse Big Data to find the ‘outliers’ that can identify fraud. He highlights a variety of tools which can run complex algorithms to identify abnormal behaviours and argues that these can be ‘tweaked’ to identify rogue traders or other types of malpractice.
Eddie Short comments: “Fraud and corruption usually occurs at an individual level, so it’s very hard to spot using Big Data alone. Companies need to switch to a more analytical workforce to increase the likelihood of eyeballing those anomalies which exist as a result of fraudulent activity. Many organisations have some of the brightest people on the planet – hackers and crime bosses – working against them. It’s a metaphorical war of intelligence!”
According to Short, by using Big Data to fight fraud, organisations need to:
allow time for analysis: enabling their employees to test, experiment with and interpret Big Data, without fear of failure, to gain genuine business knowledge and understanding, so they can identify best practice and fraudulent activity
look to the future: by creating more sophisticated algorithms to enable the processing of even greater amounts of data, faster and more accurately. This means less opportunity to hide bad or fraudulent practice. This will also include greater use of cognitive and Artificial Intelligence systems which can be much more predictive.
Hitesh Patel, UK Forensic Partner at KPMG, adds: “The sheer amount of data created on a daily basis is being used as a smokescreen by individuals intent on defrauding organisations. They use the mass of information that exists to bury what they are doing, but the key to beating them revolves around analytics using forensic techniques for greater transparency and having fewer places to hide.
“Analytics alone is not the magic bullet but it is certainly the fastest way to locate the bad apples in a barrel. It’s a powerful technique to highlight oddities that require wider investigation, but real success will only happen when the capabilities of analytics tools are merged with those of skilled staff with a forensic eye, able to use these tools to spot odd transactions before they become a costly trend.”
Eddie Short concludes: “15 years ago, we were watching IBM’s Deep Blue beating chess Grand Masters by analysing moves and outcomes. Now we’re seeing systems like IBM’s Watson Technology beating the champion contestants on the US show “Jeopardy” because it anticipated and analysed the potential questions. It’s one thing to work out what the answer is; the skill is working out what the question to the answer is. It’s the same with fraud: you need to be anticipating the right questions and that requires the right Big Data tools and people to be able to achieve it.”
Mike Petrook, KPMG Press Office
020 7311 5271 (t), 07917 384 576 (m) or firstname.lastname@example.org
David Pippett, DWP Public Relations
01225 335675 (t), 07899 798197 (m) or email@example.com
Notes to Editors:
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.