There is an interesting dichotomy between the practices of fraud prevention versus fraud detection – at least I’ve always thought so. Namely, which of the two practices should an organization focus on? I’d imagine that most of the folks answering this question would surmise that fraud prevention is the clear cut winner, believing that if it can be prevented from ever happening there would be no need to detect it later on. In theory I would agree with this sentiment. In reality, however, I’m not entirely convinced. A recent study performed by a large research and consulting company touched on this very subject.
The study revealed an ominous future for those of us wishing to keep our credit card and banking accounts secure from cyber criminals. It seems that many of the nation’s leading financial institutions are reporting a heightened degree of difficulty in preventing unauthorized access to their customer’s accounts. This is attributed in part to the sophistication and creativity of today’s cyber criminals, many of whom are known to communicate trade tactics and industry weaknesses via underground internet forums aimed at assisting fellow scammers in their craft.
However, on a brighter note, the study also showed something favorable in the fight against fraud: a marked improvement in the financial industry’s ability to detect account breaches sooner, and thus mitigating substantial financial damage associated with the fraud. Countless financial institutions are embracing the use of modern identity verification technology not only during account access attempts [prevention], but also for instances of re-authenticating a cardholder’s identity after the fact [detection].
Ultimately, the practice of fighting fraud within an organization must incorporate many different facets. Suffice it to say that fraud prevention is a necessity, as is an organizations ability – and drive – to actively seek out and detect fraud after the fact. Both must work effortlessly together. When all is said and done, they are but two weapons fighting the same battle.