Banks Must Stay Ahead of Evolving Fraud Tactics
In today’s era of cybersecurity, financial institutions must adopt a comprehensive approach to fraud risk management to outsmart sophisticated criminals.
The Need for Holistic Thinking
According to a recent study, banks need to think like the criminals they’re trying to catch. By adopting this mindset, banks can design controls that address the greatest impact on fraud prevention.
- Integrate fraud and cybersecurity functions to improve threat prediction and detection
- Eliminate duplication of effort and resources by clarifying roles and responsibilities across three lines of defense
- Foster a culture of collaboration and information sharing
Redefining Organizational Structure
To achieve this goal, banks must redefine their organizational “lines and boxes” and re-evaluate the roles, responsibilities, activities, and capabilities required across each line of defense.
Key Questions for Banks
When designing their target risk operating model for financial crimes, fraud, and cybersecurity, leading banks are asking themselves:
- Processes and Activities:
- What are the key processes or activities to be conducted for customer identification and authentication, monitoring and detection of anomalies, and responding to risks or issues?
- People and Organization:
- Who are the relevant stakeholders in each line of defense? What skills and how many people are needed to support the activities?
- Data, Tools, and Technologies:
- What data should be shared across cybersecurity, fraud, and other financial-crime divisions? Can the data sit in the same data warehouses to ensure consistency and streamlining of data activities?
The Target Fraud-Risk Operating Model
By answering these questions, banks can design a target operating model that addresses the evolving landscape of financial crime. This model must emphasize:
- Independent oversight and challenge through duties clearly delineated in the three lines of defense
- Integration of business, operations, security, and risk teams for efficient intelligence sharing and collaborative responses to threats
A Holistic View
The objective of the transformed operating model is a holistic view of the evolving landscape of financial crime. This approach emphasizes:
- Independent oversight and challenge through duties clearly delineated in the three lines of defense
- Efficient and effective fraud-risk management
By adopting this approach, banks can stay ahead of evolving fraud tactics and protect their customers’ sensitive information.