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"Technology History"

Fraud in the contemporary business environment

The spread of computers and networking revolutionized the business world and simplified life for many people. Unfortunately, computers also contributed to an increase in fraud, which results in severe financial losses for businesses and individuals alike. Estimates suggest that U.S. computer fraud in the late 1990s amounted to $10 billion per year in losses. Computer thieves are not content to steal small amounts of money at a time, either. The typical bank robber averages $6,100 a heist; electronic thieves average over $100,000 per incident.

Perhaps most significant is the extent to which computer fraud permeates contemporary business and government systems. Some studies suggest that upwards of 90 percent of all major corporations (e.g., Fortune 500) have been targets of computer fraud, as have numerous U.S. government agencies—including the Department of Defense. The vast majority of these cases have resulted in some financial losses to the target organization. This high percentage apparently stems in part from the fact most computer crimes—up to 85 percent according to some studies—are committed by insiders like employees and contractors. However, some analysts believe that this high rate is artificially inflated because internal breaches are the easiest to catch.

Technology and fraud
The amount of fraud has been rising in most organizations over the last five years and, more worrying, it is expected to continue to rise. A significant factor behind this rise is the increasing involvement of technology, and in particular computers, as an integrated element of the business process. Whilst the image promoted by the media of computer "hackers" as a major source of fraud may be unfounded, fraud is becoming increasingly technically orientated, with fraudsters turning technologies designed as business tools to dishonest ends. In particular, the use of computers brings the matter of speed into the equation, affording the fraudster with the opportunity to exploit weaknesses in the controls in new systems over ever shorter time scales, as well as means by which to put money out of reach of the victim more quickly than was previously possible, and with less risk of being personally identified and caught.

Trends in fraudulent practice
As well as shifts in the tools and methods of fraud, there are significant changes in the fraudsters themselves. These changes are characterized by:

  • An increase in fraud committed by staff
The decline in the notion of a job "for life" has left many employees feeling uncertain of what their futures hold, resulting in a reduction in morale and loyalty.
  • An increase in fraud involving collusion
As business process become ever more complex, fraudsters have found that teamwork minimizes the chance of being caught. As a result of this trend, some frauds remain undetected for longer and result in larger losses for the victims.
  • Increased involvement from organized crime
In many cases, criminal organizations may collude with a member of staff, who in some cases is a deliberate plant.

The result of these trends is the drive for ever more powerful technical tools which can circumvent many of the tradition problems in fraud detection, if not identifying the opportunities for fraud before the fraudsters do so, then detecting the fraud with such speed that losses may be avoided or recovered. Such technologies have the further advantage of acting as a deterrent to fraudsters, by significantly increasing the risk of their being caught.

Prevention and Detection Technologies
Biometrics, which provide a means by which to identify an individual through the verification of unique physical or behavioral characteristics, seems set to supersede the "Personal Identification Number" (PIN) as a basis for the next generation of personal identity verification systems. There are many type of biometrics systems under development.

Andrew Patrick: Fingerprint Concerns: Performance, Usability, and Acceptance of Fingerprint Biometric Systems

¤Voice Verification
Much has been written lately about speech recognition, speaker verification and the idea of a computer being capable to recognize and identify a human voice. Speech recognition is defined as the process of automatically recognizing what word from a library of words is being said. On the other hand, speaker verification is the process of determining which registered speaker provides a given utterance or "voiceprint".

This identification method called Biometric Technology or Biometrics, is defined as the statistical analysis of biological observations and human phenomena. We can examine and identify an individuals biometric features such as fingerprints, retinal patterns, and facial features, but an individual's speech pattern has more unique qualities and is often recognized as the most natural form of biometrics. The human voice is also considered the most common form of communication and is an ideal form of personal identification, because your voice can never be lost, stolen or shared without your knowledge.

Voice Security Systems Inc.
Biometric Technology Licensing
24591 Seth Circle, Dana Point, CA 92629
Phone: +1 949 493-4030
E mail: info@voice-security.com
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