Assessing Risk for the Best Fraud Prevention
Leading analysts have called for a layered security model to protect against online fraud, account take-over, and financial loss. Trends are also showing that businesses need to improve the interactive end user experience by minimizing intrusive authentication methods while still maintaining security for online transactions and reducing the opportunities for fraud.
There is a way to have both – implement this model by providing multi-layered security and fraud mitigation that performs in the background to assess fraud risk during enrollment, account maintenance, and ongoing transactional activity. More intrusive authentication controls can then be focused on higher-risk identities or transactions. This kind of risk-based strategy that segments safer transactions from riskier ones allows businesses a flexible way to balance risk, consumer friction, and cost.
Good risk-based technology observes user behavior patterns, IP geo-location, device ID recognition, and velocity and behavior patterns, among other criteria, to determine the risk associated with use of an identity. For example, when a user transfers money during the business day from their normal mobile device, it appears as a less risky transaction than when a user attempts to open an account at five different banks within half an hour using a device showing IP addresses across the country.
Risk-scoring combined with component validation of an individual’s identity allows the most judicious use of more intrusive authentication methods. This background assessment can also identify previously unknown risks, and changes in risk situations that might have previously been deemed low-risk. Once the risk has been assessed, workflow rules and decisions result in the most appropriate authentication challenge.
Risk-based authentication is an important tool to get right. Contact our identity and fraud solutions experts for more information.
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