According to the PWC’s 2020 Global Economic Crime and Fraud Survey, 47% of global organizations reported facing online fraud (more than 5,000 respondents participated in the survey).
13% of the participants reported losing over $50 million to fraud!
With these high numbers, you can only assume that the trend of online scams and data breaches will increase within the coming years.
But with all this bad news, there is some good news as well. There are advanced fraud management systems out there that are super efficient, fast, and quick in assessing and mitigating online scams.
What are advanced fraud management solutions? How do they work and ensure security? Let’s find out!
What is an Advanced Fraud Management Solution?
Advanced fraud management solutions are software that use technology like AI and Machine Learning to detect suspicious activity, prevent it from happening and respond to such activities immediately.
They offer a combination of features like real-time fraud detection, data encryption, and behavioral analytics to understand and analyze large amounts of data.
Industries like finance, insurance, e-commerce, and healthcare can utilize advanced fraud management solutions to protect themselves and their customers. They can prevent financial losses, identify theft, and other types of potential fraud.
How do Advanced Fraud Management Solutions Work?
Advanced Fraud Management Solutions work by monitoring and analyzing user activity and behavior, along with activity between related accounts.
Through unusual behavior, they detect fraud, corruption, and other criminal activity.
Advanced fraud management solutions analyze every transaction and tag it based on its level of legitimacy.
Such systems mainly consist of 3 areas: A fraud-detection system, a fraud-prevention system, and a fraud-analysis system.
Maximizing Security in 7 Ways
Below are seven ways advanced fraud management solutions ensure data security.
- Real-Time Monitoring
- Machine Learning
- Risk-Based Authentication
- Continuous Anomaly Detection
- Multi-Layered Protection
- Data Encryption
- Collaboration and Compliance
Now let’s explore each of the above security methods, one by one.
- Real-Time Monitoring
Nowadays, businesses are flooded with data that is transferred from one channel to another within seconds.
If the information is processed in real-time and actions are taken when a threat is received, companies can save themselves from huge losses and data breaches.
To ensure fast service, advanced fraud management solutions provide real-time monitoring of activities to quickly detect and prevent suspicious activity as it occurs.
These systems collect and analyze data from various sources, including 3rd-party vendors and social networking sites, to maximize their impact and improve their fraud detection capabilities.
With fast data collection and processing systems now available, all the information is collected, assimilated, and processed in real-time. This makes fraud detection and management faster than ever and more efficient.
- Machine Learning
As we all know, machine learning and AI is the future of web security, and advanced fraud management uses them for your benefit.
These solutions use machine learning to quickly analyze large datasets to identify patterns and trends. With the information collected, these systems can identify associated fraudulent activity.
To implement machine learning, a collection of artificial intelligence (AI) algorithms are trained with historical data. That way, the system is trained about risk rules to detect future threats.
With the rules in place, the system can block or allow certain user actions. It can assess identity theft, suspicious logins, and fraudulent transactions.
While training, the system is given previous cases of fraud and non-fraud to improve your risk rules’ precision and to avoid false positives.
- Risk-Based Authentication
Another way advanced fraud management solutions minimize online threats is through risk-based authentication.
Risk-based authentication mainly involves verifying user info during sign-ins to make it easier for them to enter without going through lengthy steps.
The identity of users and devices is confirmed through factors like their IP address, behavioral patterns, device fingerprints, etc.
With these factors, the level of risk associated with a transaction is analyzed, and valid users are allowed to pass through while malicious activity is stopped and addressed.
Many advanced fraud management systems use machine learning technologies (as explained above) for risk-based authentication.
Through continuous analysis of hundreds of variables in real time, they enable dynamic risk assessment, allowing you to make accurate and timely decisions.
The system either lets the user in or, in case of suspicion, asks for additional verification or restricts access.
- Continuous Anomaly Detection
Security doesn’t have to end at the sign-up process, and that’s where Continuous Anomaly Detection technology comes into play! It provides maximum levels of security during the whole session of user activity.
During the whole session, through Advanced Authentication, the system keeps analyzing biometric data, behavioral data, device reputation, and other non-personalized information.
In case the system suspects any signs of abnormal or suspicious behavior, it automatically sends signals informing you about potential threats.
Another benefit is that high-risk operations are carefully investigated, while legitimate operations are processed automatically without delays.
- Multi-Layered Protection
Multi-layer fraud management combines multiple complementary solutions that, when worked together, provide maximum protection to users.
In multi-layer fraud management, the number of solutions doesn’t decide the effectiveness but the right solutions that address all threats for that specific business is what matters.
Through multi-layered protection, advanced fraud management systems provide multiple levels of protection, like device identification, biometric authentication, geolocation, etc., making it more difficult for scammers to bypass the system and breach data.
- Data Encryption
You might have heard of the data encryption method multiple times for data security. Data encryption is basically the conversion of data from an easy, readable format into an encoded format to ensure other parties cant read and steal it.
Data security encryption is widely used to ensure user data sent between a browser and a server moves safely. The information can be related to payments or personal information.
Systems use algorithms or ciphers to develop schemes that can theoretically be broken only through large amounts of computing power.
Through encryption, advanced fraud management solutions not only secure data transmission but also storage to prevent hackers from accessing sensitive data and using it for malicious activities.
- Collaboration and Compliance
Collaboration has become a key growth factor in the digital age, and advanced fraud management solutions facilitate with that.
Through collaborations and sharing between different organizations, these solutions help detect and prevent cross-border fraud, maximizing security.
Another way fraud management solutions offer high levels of security is by compliance with various industry standards of online security.
Solutions ensure compliance with General Data Protection Regulation (GDPR) and Payment Card Industry Data Security Standard (PCI DSS).
By meeting these strict measures and rules, they offer you the confidence to trust them with your precious data and insights into your business.
Final Words
In this article, we explored advanced fraud management systems, their working, and how they maximize security.
Advanced fraud management systems are software that ensures data security for companies and their users. They apply advanced security methods to identify threats with high levels of accuracy and speed.
Advanced fraud management systems offer Real-Time Monitoring and use Machine Learning and Risk-Based Authentication for maximum web security.
They also offer Continuous Anomaly Detection along with Multi-Layered Protection and Data Encryption to protect both the company and user data from external threats.
Lastly, through cross-organization collaboration and compliance with international security standards, advanced fraud management systems help you remain safe online as your business grows exponentially!
