Predictive Threat and Fraud Analytics

October 16, 2014

Predictive Analytics, Predictive Analytics Demystified

Meeting the Challenges of a Smarter Planet

The growth of online transactions and communication, the increased use of mobile devices, and the fluctuating economy highlight the many dynamic forms of threat today. In this paper, you will learn about the growing prevalence of threat and fraud and why it is a top priority for businesses. 

In order to address the ever-changing landscape, businesses need a systematic approach to identify their own risk.   They need insights that identify existing trends as well as future exposure.  This paper identifies how to incorporate business analytics into your decision making and how to build a proactive threat and fraud strategy. Read examples of how organizations apply IBM Business Analytics solutions to minimize the negative impact of risk and maximize positive results.


Companies that get ahead of threat and fraud save significant costs while preserving their reputation and customer satisfaction. 

  • Organizations that utilize predictive analytics in addition to business intelligence achieve an average return on investment of 250 percent (source:  IDC: The business value of predictive analytics, June 2011).

Senior Executives; Risk and Finance Managers; IT Managers; Business Intelligence Managers; Business Analysts


Key facts about Threat and Fraud trends included in this paper:

  • According to a recent study by the Association of Certified Fraud Examiners, the typical organization loses 5 percent of its revenue to fraud every year. Globally, it’s estimated that annual fraud losses exceed $3.5 trillion.
  • Nearly half of organizations that are victimized by fraud are unable to recover their losses.
  • Estimates from National Heath Care Anti-Fraud Association put health care frauds costs in the US at $68 billion annually. Other estimates range as high $230 billion.
  • The total cost of insurance fraud (non-health insurance) is estimated at more than $40 billion annually, costing the average US family up to $700 in increased premiums, according to the FBI.
  • Globally, the total cost of credit card fraud is estimated to be $5.5 billion. In the US alone, ten percent of citizens have been victims of credit card fraud.
  • According to a recent IBM global study of senior executives, 75 percent say that data theft and cyber attacks impact customer satisfaction and brand reputation.

 With a business analytics-based risk management strategy in place you become able to:

  • Access threat information across the organization in real time to determine the best time to accept the risk or stop it altogether.
  • Make decisions faster and spend less time “putting out fires.”
  • Gain more confidence and trust in decisions that are made.
  • Reduce costs and make better use of resources.
  • Build a stronger organization that is resilient to change and ready to exploit new opportunities.
  • Support business innovation while reducing or maintaining an acceptable level of operational risk.
  • Avoid negative publicity.

 Reduce Exposure and Minimize Impact

  • Identify organizational threats with business analytics
  • Eliminate insider threats
  • Reduce Credit Card Risk
  • Detect and Prevent Fraud
  • Minimize Inventory Loss
  • Assess network outages
  • Prevent energy Fraud
  • Protect national borders
  • Keep communities safer
  • Manage financial risk
  • Identify next-best action

 Five steps to a proactive threat management strategy

  1. Determine your organization’s current threat management strategy
  2. Examine how you are using business analytics today
  3. Integrate threat management into business as usual and ensure the positive commitment of all stakeholders.
  4. Assess your enterprise and external data
  5. Identify opportunities for automation and control.