One of the hallmarks of a successful investigation is rooted in the expression “knowing what you don’t know.” An experienced investigator knows a lot about a lot of things – different types of fraud, corruption, theft, misconduct, and the psychology underlying what motivates people to violate the trust that has been placed in them. They also know how these broad categories of investigative incidents play out in different industries, organizations, countries and cultures.
Of even greater importance than what the investigator knows through experience is knowing and recognizing what is unknown. This extends not just to facts but is often related to subject matter expertise. An investigator’s ability to readily recognize what is unknown, and the corresponding subject matter expertise that is needed, has never been more important or relevant than it is right now.
The dizzying pace of technological growth and innovation has created increasingly complex digital environments and workplaces that are putting the concept of knowing what you don’t know to the test. In response, the investigative and forensic accounting field is going through a significant metamorphosis to track with the exponential expansion of the use of electronic data and technology.
To keep pace with the digitized workplace, investigators will not have to define a new set of best practices but evolve how traditional best practices will be applied.
Consider the recent highly publicized investigations of social media companies that have focused on how these platforms are interacting with and accessing user data. Or how Internet search engines have experienced large scale frauds in connection with pay-per-click advertising and other forms of online advertising fraud. Yes, large scale, global e-commerce platforms enable small businesses to sell their products worldwide, but sellers’ accounts are susceptible to being hijacked and their customer remittances intercepted.
It’s not just new business paradigms that are posing challenges in complex investigations, but specifically the rapid increase of the adoption of new technologies and the inherent risk they bring to organizations.
Financial Crime & Cybercrime Will Continue to Converge
It is a rare internal investigation that doesn’t entail forensic data analysis of terabytes of email, instant messaging, accounting, business and banking records - that’s nothing new. But what is relatively new is that many financial crimes are cyber-enabled. This means that financial crime investigators and forensic accountants need to understand network security and the software systems underlying enterprise resource planning, expense reporting, payroll, procurement, and electronic banking.
Organizations’ reliance on information systems has also been exploited for the purpose of state-sponsored economic espionage and cyber extortion using ransomware. And as if that isn’t sufficiently complex, completely new digital business paradigms have come into existence requiring investigators to understand what goes on under the hood in companies across a spectrum of new industries, many of which didn’t exist 10 or 15 years ago.
The rules of evidence and investigative processes have not changed much over the last 100 years. And investigators must still gather information from whatever sources are available. What has changed though is the need to understand the type of information that is being created and stored, how the evidence within those data stores must be preserved, acquired and analyzed, and the team and skillsets that will be needed to bring the investigation to a successful conclusion.
To keep pace with the digitized workplace, investigators will not have to define a new set of best practices but evolve how traditional best practices will be applied.
Steps for Organizations to Take
Extend Your Subject Matter Expertise
Most successful investigators rely upon multiple disciplines and skillsets to conduct complex investigations. Artificial intelligence, machine learning and robotic process automation have become a part of an investigator’s standard toolkit. But even with these advanced tools, investigators who work on behalf of complex organizations need to be able to tap into an even broader array of subject matter expertise in order to understand the digital environments of their clients and how best to leverage that expertise as investigators. Each of these new business environments and paradigms requires that subject matter experts work alongside investigators to assist them in gathering evidence, identifying the responsible parties, and assisting client organizations to pursue avenues of financial recovery and remediate any control weaknesses that may have been exposed during the investigation.
Understand the Evolving Arc of the Modern Investigation
The standard arc of an investigation includes the need to gain an understanding of the victim or subject organization, its products and services, the larger industry or industries in which it participates, and the problematic conduct that is at the center of the investigation. Once an investigator has that context and an understanding of the allegations at hand, an initial picture emerges as to what information must be gathered and analyzed. Investigative steps should then be taken to determine whether the allegations have merit and to gather the evidence needed.
Complex investigations with large volumes of information, perhaps multiple allegations and conduct that span multiple geographies, oftentimes suggest the need to assemble an investigative team made up of multiple skillsets and disciplines. This multi-disciplined approach to investigations has never been more important given the widespread use of new technologies.
Navigate the Delicate Landscape of Privacy Law
Further adding to the challenge facing investigators is the rise in information privacy laws and regulations. Personally identifiable information (PII), personal health information, intellectual property, and “state secrets” are all things that investigators must consider and plan for at the outset of an investigation. In many instances, it is necessary for investigators to acquire and analyze extremely sensitive and private information and to do so in a way that does not create liability for the company on whose behalf the investigation is being conducted.
Investigators used to think nothing of forensically imaging hard drives or acquiring email in one country and bringing it back home to another for analysis. More recently, the default approach is for data to never leave that country and instead for it to be analyzed locally to avoid potentially violating one or more privacy laws. Every investigative plan must consider the data privacy implications of the investigation at inception.
Investigations are inherently learning experiences. Investigative processes are about ingesting and analyzing information at an accelerated rate. The same is true about digitization. Bringing these two processes into harmony is not as difficult as it may seem. It starts with knowing what you don’t know.
The views expressed herein are those of the author and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.
