Emily Primeaux, CFE
Associate Editor, Fraud Magazine
In January I had the pleasure of interviewing Bret Hood, CFE, about using data analytics in fraud examinations and the problem of “choice paralysis.” Currently the director of 21st Century Learning & Consulting and a retired FBI supervisory special agent, Hood has spoken at ACFE Annual Global Conferences and is a federal court-recognized expert in fraud and money laundering.
Hood recently wrote an article for the January/February 2017 issue of Fraud Magazine about choice paralysis using a grocery store study. In the article and on the podcast, he explained that this study helped highlight that when people are given too many choices, they freeze and can’t make a decision. The same can happen when a fraud examiner approaches an investigation using data analytics.
Data analytics software can produce an endless amount of data — some usable, others distracting. In the podcast, Hood explained that it’s important for fraud examiners to determine which data sets are relevant. “If we’re doing a billing fraud, I should only be concerned with the billing and not something else,” Hood said. “So if I have billing fraud, I don’t necessarily care about accounts payable. It depends on what kind of billing we have, but what happens is when we start to focus on other things, when we start to take the divergent path, that distracts us from what our original purpose is.”
Other highlights from the interview include:
- Recommendations for how fraud examiners can overcome choice paralysis, including prioritizing three things that are relevant to your case, focusing on those and fighting the urge to move down other paths as they become present.
- An analysis of how the brain processes information, including a look at your “working memory.”
- System 1, the reactionary part of your brain, versus system 2, the reasoning part of your brain.
Helpful Resources Mentioned in This Episode
- Article: “Too Much of a Good Thing: Overcoming Choice Paralysis When Using Data Analytics,” by Michael Bret Hood, CFE, Fraud Magazine, January/February 2017
- Article: “Too Many Choices: A Problem That Can Paralyze,” by Alina Tugend, The New York Times
- Video: “The Art of Choosing” | TED Talk by Sheena Iyengar
- Article: “The Surprising Poverty of Too Many Choices,” by Kristi Hedges, Forbes
- Article: “Do You Suffer From Decision Fatigue?” by John Tierney, The New York Times
- Scientific Study: “Extraneous factors in judicial decisions”
- Book: “Thinking, Fast and Slow,” by Daniel Kahneman
- Article: “8 Reasons Big Data Projects Fail,” by Matt Asay, InformationWeek
- Audio: “Former Wells Fargo Employees Describe Toxic Sales Culture, Even at HQ,” heard on NPR’s “Morning Edition”