How can You Improve the Bottom Line with Effective Fraud Mitigation?
The concepts related to fraud and ROI (Return on Investment) are not correlated. However, there is a major benefit when it comes to exploring the concept of leveraging effective fraud detection methods to serve as the proactive opportunity for competitive advantage and ample business growth.
In the modern competitive era, a business tends to face minimal margins with respect to security as fraudsters are increasingly evolving in sophistication. As such, the best mechanism to safeguard oneself is by adopting some good defense throughout. Executives that look forward to increasing the overall competitiveness of the respective businesses should aim at fraud prevention along with its impacts in an efficient & cost-effective manner for growing the given bottom line.
Understanding Fraud Mitigation for Improved Business Growth
Fraud can influence any organization in different ways. These are:
- Loss in the overall revenue –with the help of disguised sales and illicit payments
- Increase in the operating expenses –due to fraud detection & recovery
- Impact on the overall profitability
However, companies in the modern era can look forward to fighting back at fraud by blending smart technology with advanced analytics.
As companies tend to invest in a high-end, technology-driven, and intelligence-backed data analytics solution, compliance officials and corporate fraud detectors can help in minimizing the respective occurrences of frauds. At the same time, they can also help with recovering funds more efficiently than ever before. As per the reports of the ACFE (Association of Certified Fraud Examiners), victim companies lacking anti-fraud mechanisms suffered as much as twice in the overall losses. This was in comparison to organizations having proper fraud prevention mechanisms like management reviews, proactive data monitoring or analysis systems, and fraud-specific hotlines.
Increasing the Bottom Line of Your Organization
As the technology of fraud detection and prevention tends to mature, along with the increase in ROI from proactive fraud identification solutions, fraud prevention, and loss recovery become fast and highly effective. These strategies can help in improving the bottom line of any organization.
In comparison to conventional performance improvement mechanisms for ensuring fraud prevention initiatives, companies nowadays can look forward to achieving a higher ROI through the implementation of the right fraud prevention programs.
For instance, Nicholas Stehle –CEO and Founder at Scalefast –a leading enterprise-centric e-commerce solution provider, talks about the overall importance of combating fraud in the modern digital economy. He also emphasized the importance of how every firm out there requires a personalized approach. Brands in the modern era require enterprise-grade, sophisticated solutions for protecting them against bad influences. Thus, the brands can look forward to relying on trusted payment service providers.
The Fraud Prevention Mechanism by Scalefast
Currently, no industry out there is well-versed in transforming how businesses aim at fighting back against digital frauds much more than the payment industry. As per the reports of Scalefast, there is no one-size-fits-all approach to adopting e-commerce. The same applies to the scenario of fraud prevention. The implementation of successful fraud mitigation strategies needs a customized approach along with a proper balance between chargebacks and approval rates.
Scalefast has come up with advanced algorithms for keeping the clients ahead of the curve –outpacing digital criminals. The enterprise-grade, high-level fraud identification technology helps in quickly analyzing multiple data sources across hundreds of orders on a per-second basis. The real-time analysis of patterns of data orders, upon combining with third-party fraud identification & scoring tools, would result in a significant reduction of the revenue risks for the clients.
Fraud mitigation requires some extent of human touch that some of the most advanced algorithms are not capable of replicating. The team of fraud detection and mitigation experts at Scalefast helps in monitoring the stores of the clients 24/7 and eliminating issues before they start. With payment approval rates that are above industry average along with chargebacks kept to the minimum, the clients are capable of ensuring additional profit margins. Moreover, they are also capable of experiencing a major reduction in the field of digital theft.
The Overall Cost of Fraud
The losses that occur due to frauds mostly include only the direct expenses like fraud loss. Minimal consideration is given to the overall negative impacts like loss of the employee’s morale along with reputational damage following the fraud event. In the era in which customer loyalty can change, the time it will take to go through 140 characters, the concept of reputational damage could be non-recoverable and fatal. Therefore, when the given set of additional costs is taken into consideration with respect to the cost of fraud, the ROI of the successful fraud prevention program can be even better.
Surpassing Operational Challenges in Fraud Mitigation
When there are specific laws and rules in business, potential fraudsters will come across a way to break the same. As per the estimates of ACFE, a typical business will lose around 5 percent of annual revenues to cases of fraud.
In addition to the overall loss of revenue, organizations tend to incur high operational costs or labor costs through the dedication of resources & assets for detecting, recovering, and remediating from frauds. In large-scale companies in which frauds are quite prevalent, units ensuring fraud investigation have evolved significantly. For major financial institutions across the globe, the ongoing fraud detection program continues to be the initial pilot program implemented several years ago. The program has not been enhanced or updated to keep up with the increasing sophistication of high-end frauds.
Additionally, human investigators tend to be costly, subjective, and inefficient. In large-scale global organizations, vital information required for detecting and assessing prospective fraud is under the wide range of disparate systems that remain inaccessible to the expensive human investigators. They are typically forced to review and aggregate information manually required for assessing fraud-related incidents.
