Financial Institutions need to have enterprise approach to fraud management
As financial service institutions become more globalized and sophisticated, so do fraudsters. New research "Surrounded by the Enemy: The Case for Enterprise Fraud Management" from TowerGroup finds that in order to combat the growing levels of existing fraud in the financial services sector, it is essential to treat fraud management as an offensive strategy - as opposed to the reactive process that still leaves many institutions "running hard" to keep up with fraud within their organizations.
Although many good tools and technologies for fraud detection exist, a truly ‘holistic‘ approach to fraud management remains elusive for many financial institutions. TowerGroup notes that there has been an unfortunate trend toward dividing, departmentalizing, and otherwise separating fraud management from the core businesses of financial services. Detection, alert, and case management practices are too often viewed as separate and discrete activities. All of this is, unfortunately, good news for fraudsters who are increasingly able to exploit gaps and weaknesses in fraud protection and management strategies.
TowerGroup believes an enterprise approach to fraud management has become a definitive requirement in combating fraud - in terms of prevention and successful detection, escalation, and adjudication. TowerGroup estimates that the potential return on the cost of fraud management is as high as $8 returned for each $1 spent.
Without a continuous cycle of holistic fraud strategy management, institutions are leaving their customers, their bottom lines and their reputations open to existing, emerging - and worse - yet unknown methods of fraud. At the same time, by defaulting to a purely tactical approach, costs increase each time a new threat emerges. Ideally, institutions must foster a culture where vigilance becomes a way of doing business, and stopping fraud becomes an investment and a customer value proposition - instead of just an added cost or responsibility.
(This is TowerGroup press release)
Banknet's "Fourth Annual CXO-CTO Summit" on 15th May, 2008 will discuss CYBER SECURITY & FRAUDS, Risk Management, Core Banking, Basel II, Credit Management and related issues. Banknet will also release the findings of "Financial Systems Survey 2008" at the Summit.
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