October 14th, 2006 by satish
Business Rules in “Vicious Cyclic Markets”-Fraud detection An Example…
Anti-virus software market is a market that I like to call the “Vicious Cycle Market”(VCM-There is my first three-letter acronym -TLA!). A “Vicious Cycle Market” market feeds on itself. Its characteristics are:
1. Drivers Promote the Market: The Primary Drivers of the market benefit with each new advancement. It serves as a challenge. For example each new version of an anti-virus software prompts a hacker to create a better virus and vice-versa. In other words lack of a virus means a doomed anti-virus market.
2. Time is of Essence: If the solution to the problem takes too long then it is no longer useful. The cost of not taking corrective action is way too high.
3. It is Viral: Looks obvious, but the fact is the driver multiplies and moves through the community.
4. The market lags the driver: In other words, the solution is a post-facto event.
Fraud detection is a simillar market. The primary critical challenges are:
1. Time is of essence: If it takes too long to detect it or the detect the underlying conditions the system fails.
2. Manual processes aid fraud: Training personnel to detect fraud is not always easy, if systems can prevent fraud or detect it that would be ideal.
3. Understanding conditions for detecting fraud requires stakeholder involvement: A surveillance inspector is required here - a developer would be a misfit.
The avoided costs are significant when you think of automating the fraud detection conditions using a BRMS. besides even throwing a number of people around for detecting fraud may not help - it simply wont solve the problem, especially if the number of transactions is very high.
We recently worked with a stock exchange to help them implement a fraud detection system. About 10 surveillance inspectors create fraud detection rules that form the heart of the system. Given that it is a stock exchange, it was interesting to see the peak transaction activity.
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on Saturday, October 14th, 2006 at 12:13 pm and is filed under Business Rules.
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October 14th, 2006 by satish
Business Rules in “Vicious Cyclic Markets”-Fraud detection An Example…
Anti-virus software market is a market that I like to call the “Vicious Cycle Market”(VCM-There is my first three-letter acronym -TLA!). A “Vicious Cycle Market” market feeds on itself. Its characteristics are:
1. Drivers Promote the Market: The Primary Drivers of the market benefit with each new advancement. It serves as a challenge. For example each new version of an anti-virus software prompts a hacker to create a better virus and vice-versa. In other words lack of a virus means a doomed anti-virus market.
2. Time is of Essence: If the solution to the problem takes too long then it is no longer useful. The cost of not taking corrective action is way too high.
3. It is Viral: Looks obvious, but the fact is the driver multiplies and moves through the community.
4. The market lags the driver: In other words, the solution is a post-facto event.
Fraud detection is a simillar market. The primary critical challenges are:
1. Time is of essence: If it takes too long to detect it or the detect the underlying conditions the system fails.
2. Manual processes aid fraud: Training personnel to detect fraud is not always easy, if systems can prevent fraud or detect it that would be ideal.
3. Understanding conditions for detecting fraud requires stakeholder involvement: A surveillance inspector is required here - a developer would be a misfit.
The avoided costs are significant when you think of automating the fraud detection conditions using a BRMS. besides even throwing a number of people around for detecting fraud may not help - it simply wont solve the problem, especially if the number of transactions is very high.
We recently worked with a stock exchange to help them implement a fraud detection system. About 10 surveillance inspectors create fraud detection rules that form the heart of the system. Given that it is a stock exchange, it was interesting to see the peak transaction activity.
This entry was posted
on Saturday, October 14th, 2006 at 12:13 pm and is filed under Business Rules.
You can follow any responses to this entry through the RSS 2.0 feed.
You can leave a response, or trackback from your own site.