Practical Fraud Prevention

Chapter 3. Fraud Analysis Fundamentals

Look for the bare necessities…

Terry Gilkyson¹

In this chapter, we’ll cover the fundamentals of fraud analysis, elements that are relevant to every fraud-fighting team, regardless of industry. These topics—foremost among them thinking like a fraudster, but including others such as the distinction between account and transaction in fraud prevention, practical anomaly detection, and crisis planning and response—are important to understand when combating a wide variety of fraud types, and also to bear in mind when developing a wider strategy of fraud prevention for your organization.

We won’t be able to mention all of these everywhere they’re relevant throughout the rest of the book. They’re relevant to practically everything in the book. They’re the fundamentals you need to keep in mind while reading, and the context in which everything else takes place.

Thinking Like a Fraudster

The most fundamental skill for a fraud analyst is thinking like a fraudster. The technical aspects of fraud detection and analysis are vital, but real success requires the right mindset: the mindset of a fraudster.

Fraudsters look for vulnerabilities everywhere and attack where they see a way in. You can’t rely on them behaving as they have done until now; their whole MO is based on trying to trick your business. Predicting fraud is not like predicting most trends, because fraudsters fight back. To outthink them, both day to day and when you’re working on high-level ...