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GRC Tuesdays: Building The Case For Your Fraud Detection and Investigation Solution

In this fourth and last blog of the 4 parts “Building The Case” series, I will focus on fraud detection and investigation solutions – hence SAP Business Integrity Screening, but the previous blogs in the series addressed all the SAP solutions supporting the 3 Lines Model: internal control and compliance with SAP Process Control, enterprise risk management with SAP Risk Management, but also internal audit with SAP Audit Management.

In case you have been looking at how to quantify potential gains and savings by reducing anomalies and potential fraud events, then the value calculator described in this blog should be able to help.

It’s intended to help organizations create a business case by calculating the potential value of technologies designed to improve detection and prevention of anomalies.

To quantify the potential benefits of an enterprise approach to anomaly detection, the SAP Business Integrity Screening Value Calculator provides real, useful estimates and data to help organizations:

  • Protect revenue and reduce losses
  • Use behavioral analytics to detect and investigate suspicious patterns
  • Use powerful analytics capabilities that reduce false positives
  • Detect fraud and investigate suspicious patterns faster

Should you decide that this is worth trying out, then just go to the SAP Business Integrity Screening Value Calculator and click on GET STARTED. No need to register to this free tool!

Before we start, I just want to highlight the fact that this value calculator provides estimated data for illustration purposes only. Actual results or costs may of course vary and may be affected by additional factors that would need to be taken into account when using this information in your business case.

 

Section 1 – Configure

 

SAP Business Integrity Screening provides anomaly, fraud and third-party risk detection and investigation to protect your business. Most calculations are driven by your estimated percentage of revenue lost due to fraud.

Properly configured, the solution will allow you to:

  • Detect anomalies earlier to reduce financial loss
  • Improve the accuracy of detection at less cost
  • Better predict and prevent future occurrence

In this first step, you’ll therefore be asked to provide your best estimate for various company attributes. Don’t worry, you can then change them to create different scenarios if you wish.

What indicators are required:

  • Annual gross revenue
  • Average annual fully-loaded cost per full-time equivalents (FTE) involved in fraud and anomaly detection and investigation activities
  • Estimated average annual revenue lost to fraud, default set at 5% as per the findings from the Association of Certified Fraud Examiners (ACFE)

 

Section 2 – Design

 

As per a Forrester study, 47% of respondents agree that fraud management processes are manual and lack automation. With that in mind, an organization can easily design screening lists, analyze patterns and define detection rules and models with high-performance application architecture and predictive insights. This section will therefore focus on benefits from more intuitive design for effective detection rules.

What indicators are required:

  • Full-time equivalents (FTE) maintaining the current system and designing fraud and other anomaly detection rules. This includes Business Analysts and IT resources
  • Average annual productivity gain using an automated system enabling data sourcing and detection rule building

 

Section 3 – Set Up

 

Efficient fraud detection requires more accuracy and fewer false positives. Having the right rules and strategies to minimize false positives is precisely what this section will focus on.

In this area, benefits can be achieved by:

  • Defining detection strategies based on fine granular criteria
  • Defining screening strategies for business partners
  • Providing real-time accuracy simulations and calibration of strategies

What indicators are required:

  • Number of false positives per year. These are the anomalies that have been incorrectly raised and then closed by the investigators
  • Average person hours spent per case investigation for all exceptions: potential fraud, anomaly, business partner risk, etc.

 

Section 4 – Detect

 

This section of the value calculator goes over the benefits that an organization can gain by saving losses with early detection mechanisms and by blocking suspicious activities. Hence preventing fraudulent transactions to be executed and funds leaving the organization.

What indicators are required:

  • Amount of unrecoverable losses resulting from late detection of fraud, including litigation costs, legal fees, and more
  • Potential additional loss reduction through improved detection rate
  • Improvement of identified losses recovery due to faster detection

 

Section 5 – Investigate

 

Effectively managing alert workload and focusing on the highest impact cases will de facto help investigation teams. With a suitable solution, they get access to a comprehensive alert management feature with advanced inquiry and analysis features. This will help them collaborate for faster investigations as well as give them the ability to more intuitively capture findings and remediate issues.

What indicators are required:

  • Number of full-time equivalents (FTE) across the entire organization tasked with investigating exceptions
  • Time spent on low-level tasks. For instance: time wasted searching for information in different source systems

 

Section 6 – Analyze Performance

 

Once the entire process has been executed, and since this is after all an iterative cycle, continuous improvement and defining of techniques will drive further value. This last section before the summary will focus on added-value that can be brought by getting real-time performance analytics and management reporting for better informed decisions and timely action but also thanks to ongoing monitoring in order optimize the quality of investigations. Last but not least, it will also include benefits of putting in place preventative controls.

What indicators are required:

  • Number of full-time equivalents (FTE) across the entire organization tasked with producing exception reports
  • Productivity increase as a result of automated reporting. By default, this indicator is set at 50% based on our experience, but could go up to 80% when migrating from a purely manual system

 

Section 7 – Total Value

 

That’s it! This last section is a summary that displays the potential value gain achievable with SAP Business Integrity Screening. It includes 4 graphs:

Current%20Spend%20vs.%20Potential%20Spend

Current Spend vs. Potential Spend

Difference%20in%20Spend%20%28lighter%20color%20is%20previous%20state%20and%20darker%20colors%20represents%20potential%20shift%29

Difference in Spend (lighter color is previous state and darker colors represents potential shift)

Total%20Gains%20by%20Control%20Step

Total Gains by Control Step

Total%20Spend%20and%20Gain

Total Spend and Gain

Registration is not required, and you can change your assumptions as many times as you wish. So why not give it a try?

What about you, what other variables do you take into consideration when building the case for a fraud detection and investigation solution? I look forward to reading your thoughts and comments either on this blog or on Twitter @TFrenehard

And stay tuned on the GRCTuesdays site for the previous blogs on internal control, enterprise risk management and internal audit.

 

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  • Key features enable investigators to detect anomalies and prevent fraud as early as possible, ... for GRC, for his insights into SAP's Business Integrity Screening solution ... Business Integrity Screening empowers to the investigator in the business ... Click the thumbnails to read Winterhawk's How to Build a Business Case for ...

     

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