A major retailer recently suffered a 45 point drop in the brand perception index in one day after the news hit about a large scale data breach. The resulting drop in sales was significant but even more devastating could be the long term damage from the loss of customer trust, loyalty and established relationships. Unfortunately, this is not an isolated incident. Rather, it is an escalating trend.
Every year, an estimated $3.5 trillion (yes, trillion) is lost due to global fraud. It’s a hard number to get your head around unless you put it into real world terms. That’s more than the GDP of the Germany. It’s the equivalent of giving $30,000 to every household in America or paying the salary of every elementary school teacher in the US. for 37 years.
Technology is accelerating the frequency and complexity of fraud schemes. It doesn’t discriminate. The same advancements that make it easier for those with good intentions to engage more easily for positive outcomes enable those less trustworthy to do harm. The conveniences that customers demand have opened new gateways for the fraudsters. Criminals are increasingly connected and capable of executing highly sophisticated schemes that victimize individuals, enterprises and municipalities.
As incidents of fraud and financial crimes rise, consumers are rewarding organizations that are forward thinking and develop effective capabilities to thwart these crimes and penalizing those that don’t. The new opportunity lies in establishing the right balance between protecting customer data and enterprise transactions while delivering a seamless, superior customer experience.
Consider these strategies.
1. Elevate the agenda: Fraud, cybercrime and other threats are no longer just the domain of IT, operations or security. The potential severity of the impact to customer value and the bottom line, elevates the responsibility of cyber-security and fraud management to the highest levels of the organization. There must be a clear focus on governance and a commitment to a culture of vigilance from the top.
2. Act with insight superiority: Leverage all sources of data – internal and external, structured and unstructured – to provide a comprehensive basis for fraud defense and customer relationship development. It’s equally important to adopt a multi-layered approach of protection and detection to enhance intelligence and prevention for a seamless, end to end operation.
3. Adapt with agility: People, processes and technology must act in unison to operate effectively within a strong governance framework. Likewise, it’s imperative to adopt a lifecycle approach that continuously adapts to and outpaces evolving threats, fraudsters and criminal organizations.
With IBM’s help, municipalities and enterprises across industries can harness new analytics capabilities and develop an integrated approach that transforms data to get deeper intelligence. Every data point and incident can generate insights into what will occur, what has occurred and how best to prevent future threats. To help organizations address these challenges, IBM announced its Smarter counter fraud initiative – a comprehensive set of integrated market-leading capabilities designed to combat today’s new threats. This initiative – unparalleled in the industry – brings together Counter Fraud Management Software, Cybercrime Protection software and extensive Counter Fraud Consulting Services to give clients a holistic approach to counter fraud.
Learn more about IBM Smarter counter fraud initiative here. Follow the conversation on Twitter at #CounterFraud.
Join us at the Smarter Commerce Summit in Tampa, Florida – 5/12 through 5/15 – to hear more about what you can do to launch an effective counter fraud strategy.