The effort has taken 500 fraud consulting experts, 290 fraud-related research patents and $24 billion in investments since 2005, but IBM ‘s “Smarter Counter Fraud" initiative has launched, based on software that allows organizations to gain better visibility and take a more proactive, holistic approach to combatting fraud.
This includes the ability to aggregate Big Data across a variety of internal and external sources – including mobile, social and online – and apply analytics that continuously monitor for fraudulent indicators. Advanced analytics can understand non-obvious relationships and co-occurrences between entities; enhanced visualization technologies can identify and connect fraudulent patterns closer to point of operation; and machine learning can help prevent future occurrence based on previous attacks and behaviors. These capabilities have been consolidated into one Counter Fraud Management platform, which builds on the recent acquisitions of Cognos, i2, SPSS, Q1 Labs, Trusteer and SoftLayer.
In tandem, the company is offering four levels of counter fraud as-a-service: Hosting, Application Management, Behavior Modeling & Scoring and Analytics & Referral Generation are all offerings that use a subscription-based model.
IBM also launched a new counter-fraud intelligence task force as part of the initiative – dubbed IBM Red Cell – that will work in tandem with the IBM X-Force unit to continuously research trends, develop strategies and deliver enhancements to the software and services R&D team.
Finally, IBM's Counter Fraud Center of Competency gives clients global access to fraud industry experts, advanced analytic capabilities and technical implementation services.
"Information we once considered unobtainable is now within our grasp," said Hilary Simpson, head of ICT Business Partnering at the London Borough of Camden, in a statement. Working with IBM to streamline processes, improve services, reduce tax fraud and increase revenue, Camden has been able to create a "Residents' Index," uniting information from multiple services to create a single, consistent view of all resident data, including the services they're accessing.
"We have identified at least a dozen specific examples where a Residents' Index, based on IBM Big Data and analytics technology can help us,” Simpson said. “We have estimated that the solution could help to cut single person council tax discount fraud by 5%, potentially delivering major savings for our borough."
IBM offered a few salient data points to outline the scope of the fraud issue: A 2013 Javelin Strategy and Research report found that identity fraud incidents increased by more than one million victims in 2012 – rising to 12.6 million people – and resulting in the theft of nearly $21 billion. And, each day the US healthcare industry loses $650 million due to fraudulent claims and payments.
Also, according to the Association of Certified Fraud Examiners, the typical organization loses 5% of its revenues to fraud each year, translating to a potential projected global fraud loss of more than $3.5 trillion. The median loss caused by occupational fraud cases was $140,000 in its research; more than one-fifth of these cases caused losses of at least $1 million.
“IBM is applying many of the same tactics, techniques and procedures used by the intelligence and law enforcement communities to help commercial organizations take a holistic view of this growing and pervasive threat," said Robert Griffin, vice president at IBM Industry Solutions, in a statement.
"These technologies allow line of business leaders to quickly adapt to emerging threats across the entire organization. Our new initiative puts Big Data and Analytics into the hands of those tasked with defending their organizations from financial losses, protecting the brand and delivering exceptional customer service."