Fraud - Computer Fraud and Security Agenda Process of fraud...

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Computer Fraud and Security
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Agenda Process of fraud Why fraud occurs Approaches and techniques used to commit computer fraud How to deter and detect computer fraud
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Is Fraud A Problem ? Number of Fradulent occurances in past year 58% 10% 7% 25% 1 to 5 6 to 10 11 to 20 21 + 76% of organizations have had fraud occur in last year 25% of them have had more than 21 fraud incidents in that year
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Fraud Is Costly ! The Average organization loses $9 a day per employee to fraud. The average fraud costs a company $200,000. 23 % of Large U.S. companies experience frauds of $1 million or more on an annual basis. Fraud costs the U.S. over $435 billion annually. Organizations lose 6% of annual revenue to fraud. Fraud has large indirect costs, including loss of productivity and legal costs.
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The Fraud Process Most frauds involve three steps. The theft of something The conversion to cash The concealment
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The Fraud Process Common way to hide theft charge stolen item to an expense account Payroll example add a fictitious name to company’s payroll
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The Fraud Process Lapping Perpetrator steals cash received from customer A to pay its accounts receivable Funds received at a later date from customer B are used to pay off customer A balance, etc
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The Fraud Process Kiting Perpetrator covers up theft by creating cash through transfer of money between banks Perpetrator deposits check from bank A to bank B and then withdraws money
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Kiting (cont.) Since insufficient funds in bank A to cover check, perpetrator deposits check from bank C to bank A before check to bank B clears Since bank C also has insufficient funds, money deposited to bank C before check to bank A clears. Scheme continues to keep checks from bouncing
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Agenda Process of fraud Why fraud occurs Approaches and techniques used to commit computer fraud How to deter and detect computer fraud
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Why Fraud Occurs Common characteristics of fraud perpetrators Most spend their illegal income rather than invest or save it Once they begin the fraud, very hard for them to stop They usually begin to rely on the extra income
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Why Fraud Occurs Perpetrators of computer fraud tend to be younger and possess more computer knowledge, experience, and skills Some computer fraud perpetrators are more motivated by curiosity and challenge of “beating the system” Others commit fraud to gain stature among others in computer community
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Why Fraud Occurs Three conditions necessary for fraud to occur: pressure or motive opportunity rationalization
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Pressures Some financial pressures living beyond means high personal debt “inadequate” income poor credit ratings heavy financial losses large gambling debts
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Pressures Some work-related pressures: low salary non-recognition of performance job dissatisfaction fear of losing job overaggressive bonus plans
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Pressures Other pressures challenge family/peer pressure emotional instability need for power or control excessive pride or ambition
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This note was uploaded on 10/25/2011 for the course AIS 141 taught by Professor Yanxiong during the Fall '10 term at CSU Sacramento.

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Fraud - Computer Fraud and Security Agenda Process of fraud...

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