Forensic data analytics transforms risk function

Forensic data analytics transforms risk function | Corporate Risk & Insurance

Forensic data analytics transforms risk function
Ever find yourself dreaming of ways to make your job easier, while also doing it better? For many risk managers these days, forensic data analytics (FDA) are that dream come true. “Businesses are using the power of FDA to transform their risk functions in a way that was never previously possible,” said Andrew Gordon, EY global FIDS leader.

FDA is the aggregation of all kinds of data with the goal of managing risks ranging from legal to compliance to fraud. “When enhanced through human intelligence, companies can use FDA technologies and techniques to better monitor, prevent, detect, investigate and predict anomalies in business activities and transactions,” said EY’s Global Forensic Data Analytics Survey 2018.

It’s already been used for quite some time to manage money-laundering risks, financial statement fraud, and to carry out internal investigations. It’s common practice in anti-money-laundering compliance programs, for example, to use data collection and analysis to identify suspicious access to customer accounts.

FDA has proved itself to be effective, too. Across all 14 areas of risk included in the survey, utilising FDA was found to be more beneficial than not. The areas traditionally associated with FDA, like money laundering, were still found to be the most highly effective, but now businesses are finding it to be valuable in emerging risk areas, too. For example, almost a quarter of respondents in the survey said that FDA was very effective in the emerging areas of data protection and privacy compliance.

FDA effective across all risk areas
(click to enlarge)

Source: EY

Nearly 90% of respondents agreed that improved risk assessments are the main benefits of using FDA, with risk identification in large data sets coming in a close second.

Using FDA comes with its own set of risks as digital transformation introduces both new opportunities and dangers; yet far more often than not, the benefits of using it outweighed the cost. “Digital transformation drives advancements in FDA but also introduces new risks,” said EY. “However, FDA advancements are enabling companies to gain business and risk insights faster and more accurately than ever before.”

Benefits of FDA are broadly recognised

Source: EY

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