Fraud Trends for the Future – Need for Real-time Risk Assessment – Part Two

In our series on Fraud Trends for The Future, one concept identified as becoming more and more important is the need for real-time fraud risk assessments. But what does that really mean?

Most are comfortable and aware of the term risk assessment. A fraud risk assessment is aimed at proactively addressing a business’s vulnerabilities to internal and external fraud. This includes:

• Types of fraud vary by business line
• Internal frauds include embezzlement and misappropriation of assets,
• External frauds include hacking and theft of proprietary information

But the concept of a risk assessment typically implies a process that is conducted on a periodic basis.

Real-time fraud detection varies from your periodic fraud risk assessment. It is the real-time execution of fraud-detection algorithms to detect fraudulent activities in real time (on credit cards and other financial payment systems as well as operational activities). It makes use of real-time data analysis such as forensic analytics and predictive analytics to determine if an ongoing transaction is legitimate or not.

Studies have shown the system has reduced fraud losses in the U.S. by 70% since 1992, when real-time fraud detection was introduced.

This course delves further into the elements that comprise a real-time fraud risk assessment or detection process.