Forensic data analytics spend on the increase

Forensic Data
robert-outram By Robert Outram, The CA Magazine

26 January 2016

Three out of five organisations in a worldwide survey are planning to invest more in high-tech solutions, to prevent and detect fraud and cyber-crime

A survey commissioned by EY has found that growing cyber-crime risks and pressure from regulators are the key drivers for increased spending on forensic data analytics (FDA).

The firm’s 2016 Global Forensic Data Analytics Survey, Shifting into high gear: mitigating risks and demonstrating returns, found that three out of five respondents are planning to invest more in FDA over the next two years. Only 55 per cent said their current spending is “sufficient”.

Forensic data analytics applications can collect and use data, both structured (e.g. general ledger or transaction data) and unstructured (e.g. email, voice or free-text fields in a database), to prevent, detect, monitor or investigate potentially improper transactions, events or patterns of behaviour.

The top two risks FDA is being used to address, according to those surveyed, are internal fraud risk (77 per cent) and cyber breach or insider cyber-crime risks (70 per cent).

The survey was conducted with 665 executives globally across nine industry sectors, including financial services, life sciences, manufacturing and power and utilities.

Sixty-nine percent say that they need to do more to improve their current anti-fraud procedures, including the use of FDA tools. Notably, this figure increased to 74 per cent for the C-suite cohort (including CEOs and CFOs). Of those respondents citing regulatory pressure as the reason to improve their procedures, C-suite respondents were found to be the most concerned as regulatory enforcement becomes more rigorous and widespread.

The key reasons for increased investment were given as growing cybercrime risks (53 per cent) and increased regulatory scrutiny (43 per cent). How FDA tools are deployed is also changing, with 63 per cent of respondents saying they invest at least half of their FDA budget on proactive monitoring activities.

David Stulb, EY’s Global Leader of Fraud Investigation & Dispute Services (FIDS), said: “The threat of cyber-crime is an everyday reality… boards and senior management need to incorporate FDA as a critical component of their risk management and compliance programs. This is especially critical given the current regulatory enforcement environment and market reaction to instances of alleged corporate fraud, bribery and cyber breach.”

The EY report notes that the rising maturity of corporate FDA efforts is also evident through the growing sophistication in their use of data. Seventy-five percent of respondents routinely analyse a wide range of structured and unstructured data, enabling them to gain a comprehensive view of their risk environment.

The report also notes that those organisations that have reported positive results from the use of FDA are more likely to have used the technology proactively, rather than solely in investigating suspected wrongdoing.

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