From The Sub-Crime to The Ridiculous

It has been a week of briefings in the London insurance market with students getting a glimpse into the workings of the financial services sector, and it was eye opening stuff for Wise Guy.

Fraud was on the agenda for some and university students were given a run down on the issues around financial services fraud.

Examples of multi billion pound fraudulent schemes and practices involving banks, insurers and multinational businesses were highlighted alongside the ever more stringent rules on bribery and financial prudence.

The mantra, “if it looks too good to be true it most likely isn’t”, still remains and students were told that more needs to be done to identify and eradicate fraud.

Interestingly one presentation looked at the issue of fraud detection. It seems all the complex anti-fraud systems have little or no effect given that 40% of frauds are uncovered by tip offs and whistle-blowers.

The drive towards and ever more connected world hasn’t come hand in hand with security it seems and IT controls accounting for 1% of all fraud detected, which ranks alongside the percentage of fraudsters which are detected by the perpetrators actually choosing to confess. Indeed 7% of frauds are actually discovered by accident.

The collapse of a major insurance company was cited as an example. When investigators quizzed auditors and senior management over the events leading to its spectacular collapse they were told that they always wondered just how the company did so well compared to their peers but no-one had thought to question the results.

The week also saw education and exams on the agenda with students presented with a view on how exam fraud was on the increase and that examination boards were looking at heightened checks and balances.

Then came a stunning insight into the students of today. In the discussion which followed one student put forward their own view on the need for a complete overhaul of the global exam system.

Their view, and I assure you this was delivered in all earnest, was that the internet of things has changed the world and that exams needed to change with it.

They contended that instead of a having to learn the topic of the exam before they took it students should be provided with a computer and be tested not on their understanding of the topic instead on their ability to access the information required to answer the questions set via the internet.

Needless to say the suggestion did not elicit a response from the panel of exam experts.

It seems all the complex anti-fraud systems have little or no effect given that 40% of frauds are uncovered by tip offs and whistle-blowers.

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