We are in the middle of a tremendous period of change in how fraud investigations are conducted. This change is driven, in part, by the massive amount of data that has been collected and stored over the past several years. As the volume, velocity, and variety of potentially relevant evidence continue to expand, it is becoming increasingly difficult for investigators to make connections and identify anomalies or patterns across these disparate data sets.

Traditionally, analysts have been able to conduct virtually all analysis using spreadsheets. As the complexity of emerging data types and the sheer volume increases, these manual methods of data analysis are no longer practical. As a result, Investigators are left to rely on random samples of information to determine if there are any unusual transactions. This has led to several problems:

1. Broader patterns in the data go can undetected without the complete data set
2. Critical issues that lie outside the sample-set are missed
3. A large amount of manual data entry and manipulation consumes too much valuable time

As a result, forward-thinking investigators are turning to AI-powered fraud analytics solutions to automatically transform mountains of data into meaningful insights for quick and effective responses to critical inquiries or allegation.

What Is Artificial Intelligence (AI)?

AI is a branch of computer science software that simulates human decision-making and activities through advanced algorithms and machine learning. While the concept of AI has been around since 1956, the use of AI in fraud detection is still a relatively new practice. Organizations that are embracing it are in a unique position to not only offload manual efforts to automation (software robots or “bots”) but also improve the accuracy of their insights and uncover issues that may have been missed using traditional methods.

When set up correctly, AI and robotics can help automate the analysis across a full data set (not just a sample), alleviating investigators from having to comb through random samples of thousands of emails and other documents in hopes of finding that one detail for which they are looking. And because AI is an intelligence system, the platform will learn to mimic human decision-making. For example, if the system flagged something that turned out not to be an issue, the AI can learn on its own not to flag it the next time. The more you interact with your AI algorithms – the smarter they can become!

The Benefits of Artificial Intelligence in Fraud Detection and Prevention

In the fight against fraud, artificial intelligence provides organizations with a huge advantage, as it enables investigators to do their work in far more detail and greater speed than ever before. Using AI results in:

• Complete Analysis: With AI, analysts can look at the full data sets (not just samples) to identify any high-risk items. This is important because it offers investigators a more complete view of their data, thus reducing the risk of overlooking critical issues.
• Increase Efficiency: AI systems are capable of sifting through huge amounts of data in minutes, compared to traditional methods that could take months. For instance, AI can quickly narrow down a list of thousands of vendors to just a few that show potential risk. From there, an investigator can very quickly review the individual data for inconsistencies.
• Reduce Cost: The automation of manual reporting and compliance procedures lifts the burden of these labor-intensive tasks. As a result, investigators have more time to carefully examine more complex areas of risk mitigation. This results in more comprehensive reviews that can greatly impact an organization’s bottom line.

While it’s easy to recognize the incredible value of AI in the fight against fraud, many organizations still feel overwhelmed by the prospect of developing a fraud analytics solution in-house. BDO Digital is helping organizations bridge the gap by combining deep expertise in fraud detection with adaptive cloud architectures and highly advanced AI dashboards to deliver proactive protection that greatly reduces and even prevents the economic and reputational repercussions of fraud. Contact us to learn more.

Kirstie Tiernan is a managing director in BDO’s Technology & Business Transformation Services practice with more than 15 years of experience providing data analysis, information technology (IT) advisory, digital forensics, and e-discovery services.