FDA Survey by EY – risk mitigation and ROI

EY's study conducted June-Sept 2015 of 665 respondents on Forensic Data Analytics (FDA), involving 17 countries with anti-fraud/anti-corruption programs .  The interview pool included: 192 Internal Audit heads / CRO, 129 Head of compliance / CFO, 28 CEO/COO/CIO and other managers, etc…and spanned industry such as 162 financial services, 149 consumer products/retail, 59 life sciences and 77 technology/communication organization.
Key Trends:

• Cyber breach and insider threat tops risk and fastest growing at a rate 32% vs. 17% for bribery/corruption; followed by 12% for capital projects risk; 
• FDA investment gap has been reduced over the last couple years; 
• Technology growth and increase in virtualization with FDA adoption is on the rise by 25% vs. 12% last year (and social media  25% vs. 21% last year, and statistical analysis at 18% vs. 11% last year); 
• Correlation between positive results and large data, for both structured and unstructured;
• Increased government and public scrutiny of fraud risks – resulting from 53% response to growing cyber risks, 43% increased regulatory scrutiny, 32% increased risk of fraud in emerging markets and 31% pressure from the board or management team

See chart below but top perceived risks include: Financial services for cyber breach at 74%; Oil/gas for bribery/corruption at 52%; Life Sciences and Technology/Communication for Internal fraud/abuse at 49% each; Power/Utilities for capital project risk at 46%; Power/Utilities for merger/acquisition at 44% and Financial services for money laundering at 46%.

Additional takeaway:

• FDA is used in 77% of internal fraud, 70% of cyber breach /insider threat, 68% of bribery/corruption risk and 60% financial statement fraud…
• FDA spending proactively, making a strong push based on 63% of respondents – which results in nearly 60% lower cost on a per fraud incident basis than companies not using proactive data analytics
• Interestingly enough, 67% (from 45% 2 years ago) plan to conduct FDA completely in-house while another 24% doing in-house would consider outsourcing (leaving 9% who outsource)

While the industry has demonstrated great strides over the last couple years, continued commitment, investment and implementation of strategy will ensure it’s positive trend.  Finally, the benefits of FDA centered around faster response in investigations, increased business transparency, getting business to take more responsibility, early fraud detection and reduced costs of anti-fraud program.