TIBCO Fraud Detection

© 2009 TIBCO Software Inc. All Rights Reserved. Confidential and Proprietary.

Fraud DetectionPatrick F. Sapinski, Senior Solutions Engineer

[email protected]


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Agenda

Who is TIBCO?

Real-Time Fraud Detection and PreventionFraud Detection ChallengesFraud Detection Approaches

Questions


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About TIBCO

• Highest market share, highest revenues, most consistent profitability• Most awards and analyst recognition: Gartner, IDC, Forrester, etc.• Proven to be technical innovator; highest R&D budget

Thousands of Satisfied Customers Around the World

Ecosystem of Service and Technology Partners

World’s #1 Independent Business Integration Software Company


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TIBCO Enterprise Service Backbone

Business OptimizationBusiness Process Management

TIBCO Software Product Category Overview


Fraud Detection Challenges


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Latest News

San Mateo County, California, to pay $6.8 Million to resolve claims that it Submitted False Claims to Medicare. Walgreens to pay $9.9 Million to Resolve Claims that it Falsely Billed Medicaid..Staten Island University Hospital to pay $74 Million to Settle Allegations of Medicaid & Medicare Fraud Asserted by Private Realtors. Cox Medical Centers to Pay $60 Million to Settle Allegations of Fraudulent Medicare Payments.Medtronic Spine to pay $75 Million to Settle False Claims Allegations of Defrauding Medicare filed by two former employees. Former Employees who filed claims to receive $14.9 Million as a Reward.`

In today’s challenging economy, finding and eliminating fraud is a high priority for everyone.


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An Example of the Challenges

Franchise Tax Board, someone we all knowEach year nearly 2.5 million personal returns and over 300,000 business entity returns require manual intervention.Analysts request detailed queries from limited accounting systems information to identify fraudulent activities.About 9 million records cannot be adequately matched each year.By identifying potential non-filers, the state government obtains approximately 250,000 tax returns and $500 million in total revenue each year.Unable to adequately detect fraudulent behavior given limited information resulting in issuance of inappropriate refunds.Data is in silos and is redundant and difficult to accessData is underutilized and delivery is not timelyData management is distributed and not optimized.


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Challenges Found in Every Business

Rules are difficult to access and cannot be easily changed and managed.Rules are spread across various applications/technologies.No solution to effectively manage business processes and rules.Incorrect/incomplete cases (tax returns, benefits claims, applications, etc) are require manual and time consuming validation process.Business rules are duplicated and costly to maintain.

Each of these challenges makes it easier for fraud to occur.


Fraud Detection Approaches


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Fraud Detection – Traditional Approaches

Forces “Rear View” analysis.Does not prevent fraud, but reacts to fraud.Millions of events are occurring, but only transactions are being detected. Early indicators are missed.Painful to add/lookup more data points.

Refund Check


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Real-Time Fraud Detection: Predict and Prevent!

CEP = Minimize Response Latency

Early Warning Signs


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Real-Time Fraud Detection: Requirements

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Distributed Historical Pattern

OfData

+ Real time EventProcessing + Dynamic Rules

+State Management

OperationalDecision Model+ = Predictive

Capability

Income consistentwith trends

in past returns?

Dramatic drop in income has high indication

of fraud.

If income drops by 75%, then

indicate possible fraud.

Filer just purchase a new Lexus

Potential Fraud

Correlating seemingly insignificant events/non-events into meaningful information for decision makers in real-time.Real-time data scoring based on historical data and analytical models resulting in prioritizing situations and responses.Models can look at dozens of interrelated variables in a holistic context.Defining business rules and constraints to identify meaningful events.Event data grid across servers/data centers/geographical locations for truly distributed agent processing.Better prediction capability requires

Merging historical data with real-time events and rulesConsidering past trends with varying confidence levels/scores

Can be based on SOA for rapid optimization of the business.


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Constant Real-Time Analysis.Proactive response to prevent fraud.Correlates millions of events as they are occurring. Early indicators of potential fraudulent acts are evaluated and scored against previous year’s data using rules and linear/non-linear models.Ability to execute in real-time learning models such as supervised, unsupervised, and semisupervised.Additional data points are easily added.Resources focus on fraudulent activities with high potential of financial return.

Real-TimeFraud

Detection(CEP)

Fraud Detection – Alternative Approach

Real-TimeData Access

(SOA)

Messaging Bus

Real-TimeWorkflow

Management(BPM)

Refund Check


Summary


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SummaryReal-Time Analysis

Constant Real-Time Analysis is required for fraud prevention as it is not “after the fact” analysis.Event correlation enables the detection of early warning signals allowing an organization to be proactive as oppose to reactive. (Solve a problem before it is a problem)Real-time analysis using rules and linear/non-linear models enables the detection of relationships among thousands of variables enabling a focused effort on preventing fraud.Real-time analysis reduces costly false positives and negatives enabling the audit team to focus on higher revenue generating activity.Real-time analysis can be conducted over time, accounts, entities, personal, etc. whereas other solutions can only produce results for a finite point in time.

Real-Time Data AccessReal-Time Data Access enables other applications/auditors to work with the latest information that is consistent as oppose to day, week, etc. old information.Real-Time Data Access enables an organization to quickly add more data sources to the solution resulting in a more accurate analysis.

Real-Time Workflow ManagementReal-Time workflow management enables an organization to match available resources. As more resources become available, one can easily expand the range of cases/scores that can be investigated.Real-Time workflow management enables auditors to accurately track fraudulent cases and the statistics of success/failure.Real-Time workflow management enables organizations to take the knowledge gained from previous audits and feed it back into the solution resulting in the solution becoming more effective over time.


Fraud Detection – Questions?Patrick F. Sapinski, Senior Solutions Engineer

[email protected]

Documents

TIBCO Fraud Detection