Bank Fraud: Using Technology to Combat Losses

CHAPTER 6

The Chain Is Only as Strong as Its Weakest Link

Supply chain management uses the mantra “The chain is only as strong as its weakest link.” In any area, when a game-changing technology is introduced, there tends to be an overreliance on the technology while other very important aspects of the overall process are ignored. The devil in this case is in the details. Supply chain management is more like a relay race where each participant has to effectively complete his/her segment of the race or else the race is lost. This analogy applies well to fraud management. Even with the best technology, if certain fundamental principles are not adhered to, good results cannot be expected. It is important for these fundamental principles to be followed by everyone involved in the chain, not just a few.

In this chapter, we will dive deeper to understand the essential steps involved in building a model. The purpose of this chapter is not to convert the reader into a data science/modeling expert (which requires considerable academic training and practice). The purpose is to give enough understanding of the steps involved so that members of the extended team of operations, business, IT, and analytics discussed in the previous chapter can gain an appreciation of what is involved and the important contributions they will be making to the overall process.

DISTINCT STAGES OF A DATA-DRIVEN FRAUD MANAGEMENT SYSTEM

In order to understand why this is the case, let's begin by seeing how a data-driven ...