Fighting fraud on the new frontier

FROM THE PRESIDENT AND CEO
Bruce Dorris, J.D., CFE, CPA

Technology tends to expand at lightning speed, and the emergence of quantum computing may be no different. More and more organizations are exploring this new frontier; its impact on the fraud-fighting field could be enormous.

Quantum computing will be able to handle operations at speeds far greater than the average computers on which we now depend. Experts say that calculations that once took months or even years will soon take mere minutes. The financial services industry and other sectors are already dabbling in the new technology to find better ways to prevent fraud. But fraudsters know what’s on the horizon as well and will move just as fast.

Though in its infancy, quantum computing holds much promise for fraud detection, and we explore its potential in this issue of Fraud Magazine in “Quantum ready,” by Stefano Siggia and Mason Wilder, CFE.

Certainly, technological advancements have contributed to many recent successes in our line of work. The ACFE Occupational Fraud 2022: A Report to the Nations shows CFEs are catching frauds 33% faster now than they did in 2012, and median losses from frauds have shrunk by 16% over the past 10 years. (See ACFE.com/RTTN.) Members of the ACFE Board of Regents put many of those gains down to the efficiencies of new technologies. (See the Board of Regents interview in the September/October 2022 issue.) Just think of the potential for fraud detection and prevention if we can harness the power of quantum computing.

Our industry is already quickly adopting artificial intelligence and machine learning. According to the ACFE/SAS 2022 Anti-Fraud Technology Benchmarking Report, the use of AI and ML in anti-fraud programs is expected to more than double over the next two years, helping to expose frauds much faster.

And quantum computing will add to the efficiency and speed of the process. Just take state-of-the-art fraud detection systems, which still produce far too many false positives for businesses struggling to balance fraud prevention with customer satisfaction. Quantum computing shows much promise in eliminating those costly mistakes altogether.

For now, the costs of the new technology remain prohibitive for many organizations and, fortunately, for fraudsters too. But that barrier of entry is likely to fall as the technology becomes more mainstream and cheaper.

We must be ready for this change, and the input from seasoned CFEs will be vital. Indeed, keeping up with technology is a constant battle, as Ernesto Bianchi, the acting deputy director-general at the European Union’s anti-fraud agency OLAF, notes in this issue’s cover story.

International Data Group forecasts that 25% of Fortune 500 companies will be using quantum computers in the next three years. So, it’s closer than you think, and it won’t take long before it affects smaller businesses as well. Like many things in life, it will be here before you know it. As CFEs, we must be ready to accept yet another challenge to stay ahead of fraudsters.

SOURCE: ACFE Insights – A Publication of the Association of Certified Fraud Examiners