As the volume and variety of data and date sources have grown, so has the potential for companies to step up their compliance and anti-fraud efforts, according to the Ernst & Young Global Forensic Data Analytics Survey.
While some companies may be exploiting the full power of big data for forensic analysis, many need to apply more advanced techniques to protect themselves from various risks, the report notes.
“Advanced technologies that incorporate data visualization, statistical analysis and text mining concepts – as opposed to spreadsheets or relational database tools – can be applied to massive data sets from disparate sources,” according to the report. “This, therefore, enables companies to ask new compliance questions of their data that they had not been previously able to ask”
For example, as firms increasingly seek growth in markets with a higher perceived level of fraud, bribery and corruption, the risks and costs of noncompliance are also growing, according to the report.
Furthermore, the report notes:
- Analytics and big data allow companies to have more focused investigations, thus better fraud management
- These tools can be used to protect against a wider variety of risks, including competitive practices, insider trading or tax controversies
- Seventy-two percent of respondents believe that emerging big data technologies can play a key role in fraud prevention and detection, yet only 7 percent of respondents are aware of any specific big data technologies
Companies report a significant need for tools and approaches to corral unstructured data, such as text payment descriptions in the accounts payable fields of a spreadsheet. Still, only 47 percent report using only spreadsheets or database applications for forensic data analytics.
“Without the use of more sophisticated text mining technologies, it can be daunting and inefficient to analyze free-text comments among thousands – if not tens of thousands – of records in a spreadsheet,” the report notes.
Companies using technologies beyond spreadsheets and database experience:
- Improved results and recoveries, 11 percent more than others
- Earlier detection of misconduct, 15 percent more than others
- More cost-effective results, 14 percent more than others
Next Steps:
- We invite you to watch our complimentary, on-demand webcast: “Risk Management in Financial Services with EY.” In this webcast, Alexander Brash, Senior Manager at Ernst & Young LLP, will provide an overview of analytical challenges within the Operational Risk domain. This is an area of increasing regulatory concern, where advanced tools and techniques can help bring enterprise-wide data together to tell a comprehensive risk profile story, identify issues, and target areas for accelerated remediation.
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