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Top 5 Fraud & Security Posts: AI Meets AML (and Hackers)

Blog: Enterprise Decision Management Blog

Words Top 5 Fraud & Security

One of the newer applications of artificial intelligence rose to the top of the Fraud & Security blog last year: anti-money laundering. Readers were also keenly interested in learning more about cybersecurity and ATM compromise trends.

Here were the top 5 posts of 2017 in the Fraud & Security category:

AI Meets AML: How the Analytics Work

AI Meets AML: How Smart Analytics Fight Money Laundering

Brain with AML highlihgted in neural pathways

As FICO began using AI to detect money laundering patterns, three of our business leaders blogged about why and how AI was being applied. Two of the top posts of the year related to this topic, with TJ Horan explaining why advanced analytics are needed. He noted three ways AI systems improve on traditional AML solutions:

FICO Chief Analytics Officer Dr. Scott Zoldi followed up by explaining two techniques FICO has applied to AML, soft clustering and behavior-sorted lists. Of the first, he wrote:

“Using a generative model based on an unsupervised Bayesian learning  technique, we take customers’ banking transactions in aggregate and generate “archetypes” of customer behavior. Each customer is a mixture of these archetypes and in real time these archetypes are adjusted with financial and non-financial activity of customers.  We find that using clustering techniques based on the customer’s archetypes allows customer clusters to be formed within their KYC hard segmentation.”

Chart showing clustering and misalignmentRead the series on AI and AML

What Is a Cybersecurity Posture?

Cybersecurity risk score scale

The latest trend in cybersecurity is enterprise security ratings that benchmark a firm’s cybersecurity posture over time, and also against other organizations. Sarah Rutherford explained exactly what these scores measure.

“The cybersecurity posture of an organisation refers to its overall cybersecurity strength,” she wrote. “This expresses the relative security of your IT estate, particularly as it relates to the internet and its vulnerability to outside threats.

“Hardware and software, and how they are managed through policies, procedures or controls, are part of cybersecurity and can be referred to individually as such. Referring to any of these aspects individually is talking about cybersecurity, but to understand the likelihood of a breach a more holistic approach must be taken and an understanding of the cybersecurity posture developed. This includes not only the state of the IT infrastructure, but also the state of practices, processes, and human behaviours. These are harder to measure, but can be reliably inferred from observation.”

Read the full post

Hacked ATMs Lead to 70% Rise in Debit Card Fraud

ATM with Hacked stamp

2017 saw a continued increase in compromised ATMs in the US. As TJ Horan reported:

TJ also provided tips for consumers using ATMs.

Read the full post

Why Do Hackers Commit Cyber-Attacks?

Dick DastardlyWith all the focus on data breaches, Sarah Rutherford posed this question, and provided the top three reasons:

  1. For financial gain
  2. To make a political or social point
  3. For the intellectual challenge

“The ‘why’ of cybercrime is complex,” she added. “In addition to the motivations already mentioned, hackers could also be motivated by revenge or wish to spy to gain commercial or political advantage. The different motivational factors for hacking can coincide; a hacker who is looking for an intellectual challenge may be happy to also use their interest to make money or advance their political agenda.”

Read the full post

Follow this blog for our 2018 insights into fraud, financial crime and cybersecurity.

The post Top 5 Fraud & Security Posts: AI Meets AML (and Hackers) appeared first on FICO.

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