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Caiman Crocodiles Anyone?

On a recent trip to the Amazon, I had to ponder whether taking a wooden canoe in Caiman infested waters was worth an excursion deeper into the jungle. We weight risks and rewards daily and fraudsters are no different.

Individuals make a conscious decision and weigh the relative risks and rewards of any activity, then act according to their personal risk threshold. If the reward is high and risks low, individuals are more likely to engage in dishonest behavior. This also assumes our subjects are higher cognitive individuals with the mental capacity to decide right from wrong, and in the case of deviant behavior, or our fraudsters, make the wrong choice.

A personal experience exemplifies how this risk-reward scale can motivate fraudsters. Several years ago, I conducted an in-depth interview with a convicted serial arsonist, a criminal that defrauded millions of dollars and was successfully prosecuted. John Doe never had a prior incident with law enforcement, and had no other signs of deviant behavior. He suffered a legitimate loss and made a claim for damages and started to follow the claim protocol as explained to him. After he submitted his claim form and appropriate damages, he received a claim settlement check that was for $1,000 more than what he had claimed. This mistake by the company created an opportunity for him, a small opportunity that would grow into a four-year, multi-million dollar scam. In his case, the company created a low risk-high reward platform.

However, there is hope! At the core of these approaches is the foundational ideal that businesses must look to reduce opportunity as much as possible, even small changes from a company’s perspective can have significant results. Companies must leverage technology to help fight technology. Companies can use analytics to maximize detection and optimization with reduced efforts. One, well trained analyst utilizing the power of analytics can filter and route hundreds (of even thousands) of claims or policies, which would normally have to be reviewed using manual methods. In this manner, carriers can now focus on those claims that have the highest potential for success, makin

g them more effective and efficient. This makes it more difficult for fraudsters by disrupting the risk-reward scale in their favor.

Message me if you are wondering if I took the risk with the Caimans!

Stay safe!

Dr. Fraud


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