Using Model Calibration and Optimization to Reduce Fraud Risk

Fraud risks pose an increasing threat to bank operations and profitability. Too often, however, the anti-fraud programs of banks and other financial institutions are too costly and not effective enough. Given adequate resources and the focused attention of management, a continuous program of anti-fraud model calibration and optimization can help financial institutions make substantial strides in their anti-fraud efforts.

This article lays out a five-step program of model calibration and optimization that can help to increase fraud detection rates and reduce false-positive test results.