Rise in cybercrime among top drivers of investment in forensic data analytics

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 forensic data analytics, according to a new survey.

EY’s 2016 Global Forensic Data Analytics Survey, "Shifting into High Gear: Mitigating Risks and Demonstrating Returns," found that internal fraud risk ranks highest for the application of FDA at 77% and cyber breach or insider threat risk ranks second at 70%.

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% 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.

“For organizations, the threat of cybercrime is an everyday reality, posing a dynamic and relentless challenge," says David Stulb, EY’s Global Leader of Fraud Investigation & Dispute Services (FIDS).

"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% of respondents saying that their FDA spend is sufficient, a drop from 64% 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 cybercrime risks and increased regulatory scrutiny are the top drivers at 53% and 43%, respectively.

How FDA tools are deployed is also changing, with 63% 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.

"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.”