- Three out of five respondents plan to increase their spending on forensic data analytics (FDA) over the next two years
- The use of data visualization tools to prevent and detect fraud has doubled since the 2014 FDA survey
- Leading companies are leveraging large and varied data sets that incorporate structured and unstructured data sources
London, January 20, 2016 – Cyber breaches and insider threats, which include malicious insiders stealing, manipulating or destroying data, are the fastest-growing risks according to executives and are driving investment in FDA, finds EY’s 2016 Global Forensic Data Analytics Survey, Shifting into high gear: mitigating risks and demonstrating returns.
The survey was conducted with 665 executives globally across nine industry sectors, including financial services, life sciences, manufacturing and power and utilities. When looking at the current use of FDA tools to investigate incidents or manage risk, the survey found that internal fraud risk ranks highest for the application of FDA at 77 percent and cyber breach or insider threat risk ranks second at 70 percent.
Sixty-nine percent say that they need to do more to improve their current anti-fraud procedures, including the use of FDA tools. Notably, this figure increased to 74 percent for the C-suite cohort. Of those respondents citing regulatory pressure as the reason to improve their procedures, C-suite respondents were found to be the most concerned as regulatory enforcement becomes more rigorous and widespread.
David Stulb, EY’s Global Leader of Fraud Investigation & Dispute Services (FIDS), says:
“For organizations, the threat of cyber crime is an everyday reality, posing a dynamic and relentless challenge. This means that Boards and senior management need to incorporate FDA as a critical component of their risk management and compliance programs. This is especially critical given the current regulatory enforcement environment and market reaction to instances of alleged corporate fraud, bribery and cyber breach.”
Increased FDA Investment
With just 55 percent of respondents saying that their FDA spend is sufficient, a drop from 64 percent in our 2014 survey, it is no surprise that three out of five say that they plan to spend more on FDA in the next two years. When looking at the reasons for increased investment, the survey found that responding to growing cyber crime risks and increased regulatory scrutiny are the top drivers at 53 percent and 43 percent, respectively. How FDA tools are deployed is also changing, with 63 percent of respondents saying they invest at least half of their FDA budget on proactive monitoring activities.
FDA Use on the Rise
In response to these increased risks, the use of advanced FDA is becoming mainstream, with new technologies and surveillance monitoring techniques widely used to help companies manage current and emerging fraud and cyber risks. The rising maturity of corporate FDA efforts is also evident through the growing sophistication in their use of data. Seventy-five percent of respondents routinely analyze a wide range of structured and unstructured data, enabling them to gain a comprehensive view of their risk environment.
David Remnitz, EY’s FIDS Global and Americas Forensic Technology & Discovery Services (FTDS) Leader, remarks:
“Given the level of pressure organizations are facing on fraud prevention, it is no surprise that the majority of respondents are expending more effort on proactive initiatives. Surveillance monitoring programs utilizing FDA can help organizations to strengthen their compliance programs, improving corporate culture and bolstering the confidence of regulators and other stakeholders.”
FDA Maturity Leads to Positive Results
The findings also show that there are striking similarities among those organizations that have reported positive results from their FDA efforts, such as:
- Investing more of their total compliance and anti-fraud spend in FDA
- Harnessing a combination of sophisticated analytics tools, including social media, web monitoring and data visualization, to identify rogue activities, patterns and trends
- Incorporating larger data volumes and a wider variety of data sources (both structured and unstructured)
“Traditionally, organizations turn to advanced FDA tools to help with their investigations. However, today, FDA is becoming indispensable to proactive risk management. Organizations need to recognize the role FDA can play not only in their reactive investigations, but also in their proactive surveillance, compliance, anti-fraud and cyber breach response efforts.”
About the Survey
Between June and September 2015, researchers from Longitude Research, a business-to-business research and content agency, conducted 665 interviews across 17 countries with organizations actively using FDA. Respondents had to be the decision makers responsible for their company’s anti-fraud program.
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About EY’s Fraud Investigation & Dispute Services (FIDS) Practice
Dealing with complex issues of fraud, regulatory compliance and business disputes can detract from efforts to succeed. Better management of fraud risk and compliance exposure is a critical business priority — no matter the industry sector. With our more than 4,200 fraud investigation and dispute professionals around the world, we assemble the right multidisciplinary and culturally aligned team to work with you and your legal advisors. And we work to give you the benefit of our broad sector experience, our deep subject matter knowledge and the latest insights from our work worldwide.