Fraud Triangle Analytics
Investigations that employ a robust incident response plan are critical to mitigating short-term risk and reducing the possibility of future bribery and corruption issues.
Regulators are increasingly looking for global organizations to demonstrate that any red flag and allegation of bribery and corruption is met with a thorough and complete investigation.
This can be prevented by focusing on common trigger events including credit fraud, bank fraud, insurance fraud, email fraud and tax fraud.
When faced with an investigation trigger event such as alleged bribery or corruption, organizations must be prepared to react quickly and efficiently. Protocols are needed to ensure that red flags and allegations of impropriety are addressed in an appropriate and consistent manner.
Incident Response Plan
Basic steps of an incident response plan:
- Trigger Event — A trigger event, large or small, such as a red flag in a risk assessment or a whistleblower, will initiate an organization's response plan. Their initial response will determine the business impact for the trigger event.
- Triage — All potential instances of bribery, fraud or corruption must be evaluated to determine the breadth and depth of the impending issue. The allegation must go through triage to evaluate its credibility and to formulate the initial plan.
- Response — Quick and decisive action must be taken by senior executives to either prove or refute the allegations. A lag in response time will likely lead to dramatically increased costs and can severely damage the company's reputation.
- Remediation — The results of the investigation are then reported on and the resolution to the issue is documented. Depending on the results of the investigation, remediation may be required.
A common stumbling block
If discovering a fraud red flag is difficult, triaging the situation — answering "how pervasive?" and "how damaging?" — can be even more challenging, due not to the lack of information, but instead to the scope of information often amassed by global organizations.
As companies look to determine the most effective way to collect data relevant to an investigation, they should consider seeking alternative methods such as forensic, targeted, and self-collections to meet their objectives.
Once the relevant data has been collected and normalized, companies are charged with creating a review strategy to analyze the information to determine facts. Over the past several years, there has been a significant increase in the capabilities of the tools available to filter and analyze key information.
Balancing cost and efficiency
Often, the most time-intensive and costly phase of the electronic discovery life cycle pertains to email documents. Email review can be a critical part of any investigation although it has to be used wisely as email reviews are expensive. That being said, the key to a successful email review is fine-tuning the approach before a significant review is undertaken in addition to using the proper analytical tools.
Fraud Triangle Analytics
An effective tool for managing the data review process is Fraud Triangle analytics. It leverages targeted key words around incentive/pressure, opportunity and rationalization, supplemented with company-specific and local language jargon, acronyms and industry-specific terms to track the frequency of those terms in email communications for analysis and comparison to one's peer group.
Document review is a mainstay of corruption investigation, but growing volume and complexity of data to review continues to pose a challenge for investigators who must choose where to invest their time and resources.
A successful document review in an investigation isolates the responsive documents (often for production, whether voluntary or under subpoena) and gives the investigators the key facts in the matter.
Keyword searching, concept clustering, communication pattern analysis, and text analytics can each progressively contribute valuable insight into aspects of an investigation.
Linguistic classification and contextual analytics go a step farther by leveraging non-obvious connections in the data to pinpoint areas of high-value information, and by enabling investigators to consistently apply their interpretation of the review requirements across a data set of any size.