By Robert Griffin
“Fraud is a normal cost of doing business.”
Any organization that subscribes to this long-standing mantra needs to rethink their priorities. With 2.5 billion gigabytes of data created every day, fraud is taking on a new face in the Big Data world.
According to the Association of Certified Fraud Examiners (ACFE), organizations forfeit five percent of annual revenue to fraud, which by conservative estimates amounts to more than $3.5 trillion lost each year to global fraud and financial crimes. Fraudulent activity has grown in scope, volume and complexity, with the brash sophistication of recent attacks — and magnitude of damage, both to the brand and bottom line — elevating the anti-fraud conversation from acceptable loss to C-Suite imperative.
Today’s generation of organized and digitally-savvy criminals are using the same technologies that deliver efficiency to business and convenience to consumers — such as mobile devices, social networks and cloud platforms — to constantly probe for vulnerabilities and weaknesses. The pace of this threat continues to accelerate. Identity fraud impacted more than 12 million individuals in 2012, resulting in theft of nearly $21 billion, and each day the U.S. healthcare industry loses $650 million due to fraudulent claims and payments.
Yet, the cost of these attacks is not just financial. Those losses are almost always outweighed by the longer-term impact to the brand and customer loyalty. Nor is the impact limited to large organizations. The collateral damage hits every individual in their roles as consumers, citizens and employees through higher insurance premiums, slower medical claims processing and increased tax rates.
Help is on the way. At IBM’s Counter Fraud Summit today in New York City, we are introducing a new initiative that puts the power of Big Data & Analytics into the hands of organizational leaders responsible for mitigating financial losses due to fraud while protecting their brand value and customer loyalty.
At the event, I will be leading a discussion with some of the industry’s most well-versed fraud and cybercrime experts, including Theresa Payton, founder of security firm, Fortalice, LLC, and former White House CIO, who will deliver the opening keynote. In addition, we will welcome thought leaders from Bank of America, SunTrust, New York State, Westfield Insurance and others to discuss how organizations can tackle this pervasive and growing challenge.
To quote something I recently heard from Theresa: “Do not accept the adage that fraud is a cost of doing business. Every dollar you charge off to fraud could be impacting your brand, revenue activities, and it could be funding the cybercriminal underground.”
In my personal experience working with the intelligence and law enforcement communities, criminals are some of the very earliest adopters of new technology. Technically proficient and more organized than ever, they can hide in plain sight in the world of Big Data, covering their tracks in a sea of diverse, high volume information.
As part of the new IBM Smarter counter fraud initiative, we are delivering new software and services designed to help organizations fight fraud in a way that goes far beyond point solutions.
Just like fighting traditional crime, countering fraud requires vigilance, persistence and the recognition that you don’t want to slow down commerce. At the same time you want to make it harder for the fraudsters.
Learn more at www.ibm.com/smartercounterfraud. Follow the conversation on twitter at #counterfraud.
Read a Q&A with Theresa Payton on the state of fraud in 2014.