Fraud Analyst

Although they work for the same company and have similar responsibilities, it often feels like chief risk officers and fraud analysts operate in different worlds. Chief risk officers (CROs) focus on their company’s budget, bottom line, keeping fraud losses below a specific threshold, and keeping company revenues strong. Fraud analysts, meanwhile, are their company's first line of defense against fraud, making rapid-fire decisions about whether or not a transaction poses a significant risk

In other words, a chief risk officer’s larger view of the company’s fraud strategy can overlook the realities that fraud risk analysts face on a daily basis. If CROs don’t understand how fraud analysts do their jobs, the company as a whole could be impacted. 

Here are five things fraud analysts wish CROs understood about their jobs. Plus, five suggestions that will help both sides work better together.

1. Fraud Analysis is a Time-Consuming Process

Fraud analysts frequently find themselves staring down thousands of transactions at a time. But analysts have less than a minute to make a decision over whether to approve or deny a transaction. This time crunch leaves the fraud risk management process vulnerable to human error; analysts could approve fraudulent transactions or decline legitimate ones. If the analyst has to search for information on different sources – such as enricher pages or personal information pages – it can take them even longer to connect the relevant data.

Solution: Invest in Fraud Analyst’ Training

It’s up to senior management to ensure fraud analysts are well-trained to detect fraud in this limited window. Have senior fraud analysts train the fraud analysis team how to spot fraudulent transactions more efficiently even with limited time. CROs should help develop fraud analysts via training, seminars, and online classes that ultimately help them do their jobs better. Management can help analysts sharpen their skills and keep up with the latest technology trends. For example, CROS can give analysts shadow mode demonstrations of onboarding processes to help them anticipate potential mistakes and learn how to spot new patterns.

2. Fraud Analysts Lack the Right Tools

Besides training, fraud analysts also need more effective tools to identify and respond to suspected fraud activity faster. If fraudsters use outdated technologies they could be missing patterns that point to suspicious activity. In other words, with the right tools, fraud analysts can find more financial crime and prevent more fraud losses than they normally do. Giving analysts access to centralized platforms with the relevant data they need will keep them from spending time searching for data in multiple places.

Solution: Let Fraud Analysts Choose Their Own Tools

If fraud analysts succeed, then their CRO looks good. That’s why it’s best to let the fraud analyst decide which risk analysis tool works best for them and provides risk analysis scores with clear, understandable explanations. CROs should make sure their fraud analysts are part of the vendor selection process. Otherwise, CROs could risk investing in a technology that does not help fraud analysts improve how they do their jobs.

3. Fraud Analysts Often Lack Access to External Information

When fraud analysts have more transaction information available to them, they make faster and more accurate decisions. Unfortunately, analysts often lack important information – such as IP address information, device information, and geolocation data. Without access to this external data, fraud analysts can’t properly assess if they should approve a transaction or not. Enabling analysts to review external information allows them to understand more than just the data in the transaction they are analyzing. They can also understand clients’ behaviors, enabling them to perform better fraud prevention and reduce false positives.

Solution: Invest in Data Enrichers

There’s a saying in the business world that companies only have money to prevent fraud after a data breach occurs. But this strategy essentially means senior management and stakeholders will only react after a fraud attack or data breach occurs. A much more effective approach is to prevent fraud attacks in the first place. Data enrichers give fraud analysts access to additional information, enabling them to make more informed decisions and stop more fraud. This can lead to savings on fraud losses and spending less money responding to breaches.

4. Other Teams Are Kept Separate from Fraud Analysts

Sometimes the information fraud analysts need to make better decisions are available in their organization – but in a different division. Many organizations keep their fraud analysis, anti-money laundering (AML), and cybersecurity teams separate. This structure can contribute to organizational silos where teams don’t easily share information enterprise-wide. A cybersecurity expert, for example, can see if an account has seen an unusual number of login attempts or if a client has been logged onto a site for an unusually long time. A fraud analyst will most likely flag this type of activity, but only if the cybersecurity team shares the information. Otherwise, the fraudster continues their activities undetected. 

Solution: Build a Culture of Transparency to Enhance Communication Skills

Chief risk officers need to understand the operational risks that threaten their fraud prevention agenda. If the cybersecurity team has information that can make it easier for fraud analysts to identify different types of risk or perform a more effective risk assessment, then CROs have an obligation to break down communication issues between different groups. CROs can implement information-sharing requirements on an hourly or daily basis to ensure more fluid communication between teams. The more information that is shared, the more effective teams can be – and the easier the CRO’s job becomes.

5. Identify Organizational Weaknesses

Information-sharing is not the only way internal organization decisions can hinder fraud analysts’ efforts. Too often fraud analysts get assignments based on their prior experiences that undervalue their skills or capabilities. A fraud analyst who has years of experience working with financial institutions in certain geographies or on fraud cases valued at more than $1,000 can get assigned by the value of transactions or regional activity. This workflow unfairly puts more pressure on some analysts than others, meaning the team’s skills are not equally distributed.

Solution: Re-Think Team Organization 

CROs can build stronger, more effective fraud analysis teams by first understanding their organization’s data and segmenting their client base. Fraud analysts can then be assigned based on the client’s profile. This creates a fairer structure because the fraud analyst’s past experience in a certain geographic area or on the value of transactions does not factor into their current role. Instead, the analysts can base their decisions on how a business or individual behaves based on the normal activities of the sector. Create a culture of knowledge-sharing that enables analysts to share their certain experiences and better understand to improve the team’s overall effectiveness.

In order for CROs to do their own jobs well, fraud analysts have to be able to do theirs well. Making investments in the fraud analysis team can help those on the front line spot suspicious activities more easily, prevent more fraud, and ultimately help CROs to reduce risks..