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Business News/ Opinion / Online-views/  Frauds and opportunities
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Frauds and opportunities

What companies need to do is invest in detection and prevention tools that keep pace

Illustration: Jayachandran/MintPremium
Illustration: Jayachandran/Mint

Fraud surveys, which indicate how new and sophisticated technologies have resulted in crimes escalating in the corporate world, are truly alarming and merit close attention with both the reputation and profits of companies at stake. With advances in cloud computing, a metaphor for Internet-based technologies, the threat becomes all the more acute since the crimes could be triggered remotely from other locations, making prevention, detection and resolution more complicated. The KPMG India Fraud Survey 2012 released this month rated cyber crime, intellectual property (IP) fraud, including counterfeiting and piracy and identity theft as the top concerns for the future. Fraudsters are increasingly targeting organizational knowledge (data, code, etc.) and not physical assets to defraud companies. The survey also cautioned that platforms such as mobile and social media are becoming interfaces between financial institutions and customers, revolutionizing the way services are delivered while posing the challenge of providing a secure environment.

Similarly, a November survey by Kroll Advisory Solutions said it was shocking that despite the vulnerability to fraud, only 30% of Indian firms were willing to invest in information technology (IT) security, considering the increasing number of technology-related frauds. On balance, caution and fear should not rob attention from the potential of these technologies in helping companies to tap markets early, intelligently analyse market and other data and increase profits while simultaneously helping in detecting crimes and combating frauds much faster than in the past with real-time forensics.

 It is the very advancements in technology that help detect frauds speedily and prevent them in many cases. Algorithms are used to detect fraud patterns and alert banks and users to the misuse of credit and debit cards. Intrusion detection systems (IDS) typically scan logs of network traffic to detect known patterns of attack. Insider fraud detection tracks rare events such as an accountant inserting a fake invoice in a particular month. Artificial intelligence (AI) technologies are being used to detect money laundering by screening wire transfers. Other AI applications include data mining and artificial neural networks (that mimic biological neurons) which can learn about suspicious patterns from samples to help detect similar ones later. Simply put, there’s no foolproof method to stop frauds that will continue to get more sophisticated with technological advancements. What companies need to do is invest in detection and prevention tools that keep pace.

To what extent can technological progress prevent fraud?

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Published: 04 Dec 2012, 06:47 PM IST
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