Housing associations continue to be susceptible to corporate fraud at every level from the post room to the board room.
A fraud will mean that housing associations will struggle to meet the governance and financial viability standard, highlight internal weaknesses and could cause serious reputational and financial damage, leading to a downgrade by the regulator.
Fraud can be in many forms, including false accounting, promises of future contracts or backhanders. At the same time, physical and digital threats are converging, with fraudsters evolving more elaborate and dishonest schemes to the detriment of the housing sector.
Over the past 20 years, we’ve seen a seismic shift from a paper-based environment to the creation and storage of terabytes of increasingly more unstructured electronic data within organisations. It’s this data which holds the information key to detecting fraud.
Traditionally, a fraud investigation would involve reviewing material on a document-by-document basis to identify the relevant information, which is often less than 1%. However, artificial intelligence (AI), in the form of e-discovery platforms and related technology, is overcoming this issue and driving significant change in the fight against fraud.
A forensic image of an organisation’s data can be discreetly uploaded onto the e-discovery platform. A number of tools are then used to ensure that documents are in a searchable form and that duplicates and irrelevant data are removed. A core set of data is made available to search. Suspected individuals are not ‘tipped off’ and the integrity of the data is maintained and can be used in court proceedings if warranted.
The latest platforms enable data to be interrogated to investigate and evidence the fraud, including by identifying key people and applying key date and word searches. This vastly reduces the amount of data to be reviewed, producing it in a very structured and easy to review form. During the review, the AI built into the platform will learn and continue to reduce the data to remove irrelevant material, augmenting the human element in the process.
Combined with robust procurement procedures, which should be applied to every individual in the organisation, technology is a vital component in the fight against fraud. The technology results in a far quicker and more cost-effective solution for housing associations, ensuring fraud can be monitored, detected, and investigated highly effectively.
Nikki Bowker and David Pack are commercial litigation solicitors at Devonshires